Xbox Moves Next Halo Game to Activision, Cuts 268 Roles in Overhaul — Megathread

Xbox chief content officer Matt Booty laid out the changes in a memo to all Xbox employees, which Microsoft also published on Xbox Wire. Insider Gaming and Polygon then tried to work out which studios lost people and where each studio now stands. The official memo is the solid record. The studio-by-studio layoff details come from reporting, and that reporting admits it is incomplete. This piece keeps those two kinds of evidence separate.

Xbox's September 22 Memo Cuts 268 Roles and Redraws Microsoft Gaming​

The memo has three parts. First, the layoffs: Xbox will lay off 268 employees across Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer, as well as reorganize and merge several studios. Booty says the work done since July, including the studio divestitures, has taken Xbox about three-quarters of the way through the restructuring it announced earlier. The Hollywood Reporter got the memo independently and read the numbers the same way. The latest reductions are simply the next round in a broader mission to reduce the staff size by 3,200; Xbox is currently about three-quarters of the way through those cuts, first announced in July.

Second, a reorganization. Booty says the goal is to strengthen Xbox's franchises and games by running fewer business units, putting groups that already work together under one roof, and concentrating publishing expertise. In practice, Activision, Bethesda and King each take on more studios, and two Xbox Game Studios teams become one.

Third, an update on the divestitures announced in July. Some studios have already left, one has left on terms that still put its next game on Game Pass, one failed to find a buyer and now faces possible closure, and one is still in a formal consultation.

Several outlets confirmed the memo on the day. Gematsu, Shacknews, Variety, The Hollywood Reporter and MobileSyrup all carried it. Xbox Chief Content Officer Matt Booty announced the layoffs and organizational changes in a press release in an Xbox Wire post, and The Hollywood Reporter got it separately as an internal memo. The core facts are the 268 roles, the new reporting lines, the Playground–Turn 10 merger and the divestiture updates. None of that is in dispute.

The memo does not split the 268 jobs by studio. It names Halo Studios and the central Xbox Game Studios layer, then covers everything else as "other first-party studios." That gap is why Insider Gaming and Polygon published explainers within hours, and it is why any per-studio headcount you see should be treated as reported, not confirmed.

Halo Leaves Halo Studios for a New Activision Team​

The biggest consumer news is Halo. From here on out, Activision will oversee studios World's Edge and Rare and will also be developing the next "Halo" title. Booty says the game will be "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. A small team at Halo Studios will continue supporting the Halo community and games in-market."

That wording answers two worries. The next Halo is not being handed to an existing Call of Duty team, and Microsoft says the new group is separate from Call of Duty's development plans. Halo Studios also continues to exist, but as a smaller support operation looking after the community and the Halo games already on sale, not the next big release. The memo does not say where the new Activision team is based, who leads it, or whether it will hire from Halo Studios staff affected by the cuts.

The Hollywood Reporter adds one detail nobody else has: Activision, the Call of Duty studio, will make the next Halo game, which THR is told will be a full-feature, mainline installment into the franchise. Nobody else has reported that the next game is a mainline entry, so read it as The Hollywood Reporter's sourcing, not a Microsoft commitment. The memo only says "the next Halo title."

Halo Studios is also the one studio that is both named in the layoff line and losing its main job. The memo lists it first among the teams losing roles, and Insider Gaming puts it at the top of its list too. The memo does not say how many of the 268 were at Halo Studios.

The practical effect is plain. Halo games already on sale still have a dedicated support team inside Microsoft, according to Xbox. The next game will come from an organization that has not yet shipped a Halo title. No release window, platforms or Game Pass timing for that game were announced.

Rare, World's Edge, Obsidian and Microsoft Casual Games Move Under Activision, Bethesda and King​

After Halo, the reshuffle moves four more studios under big publishers that Microsoft bought.

Activision picks up Rare, the studio behind Sea of Thieves, and World's Edge, which runs Age of Empires. Shacknews described the move as "Activision will expand its remit to [Age of Empires developer] World's Edge," as well as working on the next Halo game itself with a new, separate team from the Call of Duty devs. Age of Empires is one of Microsoft's longest-running PC-first series, so PC players should note that it now reports to Activision instead of the central Xbox Game Studios group.

Bethesda takes Obsidian. The memo says Obsidian will continue its current projects, including Grounded, as well as the new Fallout project made in collaboration with Bethesda Game Studios. Putting a studio that is building a Fallout project under the company that owns Fallout is a neat fit, and it is the clearest case of Booty's "aligning groups that already work closely together." The memo gives the structure of the new reporting line and nothing more. Gematsu calls it a move to Bethesda Softworks, and Booty's memo just says "Bethesda."

King, the Candy Crush maker, takes over Microsoft Casual Games. Booty's memo calls the two teams our two global leaders in casual game design and live operations. The Hollywood Reporter points out that Microsoft Casual Games makes Solitaire and Minesweeper: the King business (Candy Crush) is taking in Microsoft Casual Games (Solitaire, Minesweeper). That is the most direct Windows link in the whole announcement, because those casual games have long been part of the Windows desktop. The memo says nothing about changing the games themselves, their ads or subscription tiers, or how they ship with Windows. What changes is who owns them inside Microsoft.

None of these moves is a closure or a cancellation. Each studio keeps its name and current work. What moves is management, publishing strategy and budget. The July context helps explain why that matters: GameSpot's coverage of the first round reported that King was to report directly to Xbox chief Asha Sharma, and quoted her calling King and Mojang studios that "have increasingly become platforms" and Xbox's largest by monthly active players. A group Sharma singled out as strategically important is now taking over Windows' casual games.

Playground Games and Turn 10 Become One Forza and Fable Studio​

The only true merger in the memo joins Microsoft's two Forza studios. Forza Horizon developer Playground Games will merge with Forza Motorsport developer Turn 10 Studios, acting as one studio focused on the Forza and Fable franchises. Booty calls the two teams long-time partners. Variety's copy of the memo describes them as having been technological, creative, and franchise partners for over a decade, and says the change will formally make their work one team's work.

This merger has a history. Turn 10 was shrinking before 2026. Earlier reporting on its July 2025 layoffs says 70 roles were eliminated as part of a round of layoffs that affected 9,000 Microsoft employees, and that development on the Forza Motorsport series had been cancelled and Turn 10 would continue working on the Forza Horizon series alongside Playground Games. That comes from a secondary compilation of 2025 reports, not a Microsoft statement. It does fit the September memo, which describes existing joint work being "formally" moved into one team. On this reading, the September change puts on the org chart a collaboration that had already been deepening.

Fable is the less obvious part. Playground is making the new Fable, and Shacknews notes the merged teams are both responsible for the Forza series with the latter working on the new Fable. Putting Fable under the same studio as Forza ties a major role-playing game to a racing studio's leadership. The memo says the combined studio will focus on both franchises. It does not say whether the merger affects Fable's schedule, and no outlet has reported that it does.

The memo also leaves open which name the combined studio will use, who will run it, and whether the Playground and Turn 10 brands survive. Readers shouldn't assume any of those details until Microsoft announces them.

Insider Gaming's Partial List of Studios Hit by the 268 Layoffs​

Since the memo left the layoffs mostly unassigned, the reporting has tried to fill in the gaps. Insider Gaming executive editor Mike Straw published a list built from social-media posts and the outlet's own sources. It names five groups:

• Halo Studios, which the official memo also names directly.
• The Coalition, the Gears of War studio, which the memo does not name.
• World's Edge, which the memo moves to Activision but does not list among the layoff locations.
• Treyarch, the Activision Call of Duty studio, which the memo does not name.
• Xbox Game Studios in general, matching the memo's "XGS management and central functions layer."

Insider Gaming says plainly that the list may be incomplete and that it will update the story if it learns of more studios. It also says the impact varied a lot. Some studios lost only a few people, and at least one team lost what was described as "just under half" of its staff.

The "just under half" figure lines up with a claim about World's Edge. Gematsu updated its report to say that, according to a World's Edge employee on ResetEra, just under half the studio was laid off as well. That is a single, unverified employee post, not a Microsoft number, and Microsoft has not confirmed World's Edge's headcount before or after. If it is accurate, the studio behind one of Microsoft's main PC strategy series lost close to half its staff in the same week it moved under Activision. That would make the World's Edge change a lot bigger than a line on an org chart.

Treyarch being on the list matters for a different reason. Insider Gaming frames the round as spreading across Activision and other first-party studios, so the September tranche was not limited to legacy Xbox Game Studios teams. Activision is picking up studios and a Halo project in the same announcement, and at least one of its own studios was reportedly hit by the layoffs. Those two things can both be true. The memo describes cuts across "other first-party studios" and gives no breakdown.

For The Coalition, Treyarch and World's Edge, the evidence supports saying that layoffs were reported there. It does not support saying how many people left or which projects the cuts affected. Polygon's same-day status roundup covers the same question from the other side, going through every studio's position after several rounds of cuts. The table below builds that picture from Microsoft's own statements, and marks which entries depend on reporting.

The table covers the studios named on September 22. Mojang, Blizzard and the wider Bethesda/ZeniMax group were not mentioned this week. Their most recent documented changes came in July, covered below.

Undead Labs, Double Fine and Compulsion Get Out; Ninja Theory and Arkane Remain in Consultation​

The divestiture update shows how differently each July "exit" has turned out.

Three studios have left. Booty says Compulsion Games and Double Fine went back to independent management in August, keeping their IP, back catalogs and runway funding. GameSpot's July coverage quoted Compulsion as keeping the rights to Contrast, We Happy Few and South of Midnight, and Double Fine head Tim Schafer as saying the deal returns ownership of the studio's games to the studio. Undead Labs has now left on similar terms. Variety confirmed that Undead Labs has now successfully transitioned and is partnering with a new publisher to release "State of Decay 3″ day one on Game Pass. Gematsu updated its story later that morning to report that Undead Labs is now independently owned.

For players, State of Decay 3 is the concrete result. It is leaving Microsoft ownership and is still promised day one on Game Pass. That makes it an example of a game made by a studio Microsoft no longer owns but still coming to Microsoft's subscription at launch. Neither Microsoft nor the reporting names the new publisher.

Ninja Theory is the bad outcome. In July, GameSpot reported it was set to be sold to an undisclosed buyer and would keep working on the Senua series. By September, according to Booty, two separate agreements had fallen through, and Xbox will now start consulting employees on a proposed closure while it keeps looking at other options.

The wording matters, and not all coverage respects it. The Hollywood Reporter's summary says flatly that Ninja Theory is being shuttered. Microsoft's own words are "consultation with employees on a proposed closure," along with a promise to keep exploring "other paths forward." Shacknews put it more carefully as a currently likely future closing of Hellblade series developer Ninja Theory, and Gematsu headlined it as the studio "seemingly set to close." As of September 22, the accurate status is that a closure has been proposed and a consultation is starting. Whether the studio closes depends on that process and on whether a new buyer appears.

Arkane's position has not changed. The memo says consultation is still underway and should run through the end of the year. GameSpot's July report explains why it is slow: Arkane's management began consulting its Works Council in France to review strategic options, and French labor law could delay any sale. The same report said the future of Marvel's Blade, Arkane's next game, was unclear. The memo does not mention Blade.

The Arkane studio being discussed is the one in Lyon, France. Gematsu refers to Microsoft's July-announced divestitures and names Arkane Lyon, consistent with the French consultation. Microsoft's memo only says "Arkane." Arkane's outcome won't be known before 2027.

How the September Tranche Fits Xbox's 3,200-Job Reset​

This round only makes sense next to July. GameSpot's July 6 coverage reported Microsoft's announcement that 3,200 Xbox employees would be let go over the financial year, with 1,600 starting that day and the rest phased out during restructuring. GameSpot put the total at about 20% of Xbox's workforce. In the same coverage, Sharma described the business as unhealthy. She said Xbox was running at margins three to ten times lower than comparable platform and publishing businesses, and that bets on Game Pass, multiplatform releases and a broader content lineup had not grown as fast as expected.

The September cuts are part of that 3,200, not added to it. Insider Gaming says so directly, and The Hollywood Reporter calls this round the next step toward the 3,200 target. Nothing in Booty's memo suggests otherwise. The correct way to describe it is 268 roles within the previously announced reduction, not 268 new cuts on top of it.

Booty's "three-quarters" figure includes the divestitures. The memo says the actions since July, "inclusive of the studio divestitures," put the restructuring at about three-quarters done. The inference is that staff at Compulsion, Double Fine and Undead Labs who left with their studios probably count toward the reduction, just like people who lost their jobs. Microsoft has not published the breakdown, so readers can't tell how much of the progress is layoffs and how much is studios leaving with their staff intact. Either way, about a quarter of the planned restructuring is still to come, and the Ninja Theory and Arkane decisions are still open.

July also put other studios on notice. GameSpot reported that Bethesda and ZeniMax would face layoffs as investment moved to higher-priority games, and cited Bloomberg's reporting that Bethesda would focus on Doom, Fallout, Quake, Wolfenstein and The Elder Scrolls. Blizzard was also told to expect layoffs and to shift toward higher-priority games. Mojang and King were to report directly to Sharma and also faced cuts. Against that background, the September memo reads as the second stage of one plan. July cut people and put studios up for sale. September combines what remains into fewer, bigger units.

The strategy is visible across both announcements. Studios whose IP and scale fit a large publisher's portfolio are being moved into Activision, Bethesda or King. Smaller studios that don't fit are being sold or released with their IP. The central Xbox Game Studios management layer that used to oversee many of these teams is itself losing roles, according to Booty. Some commentators went further. One analysis published on September 22 called the change the clearest signal yet that Microsoft is done running Xbox as a loose federation of standalone studios. Microsoft hasn't described it in those terms, but the fact pattern supports that reading.

What This Means for Xbox, Game Pass and Windows Players​

For most players, nothing needs doing today. None of the confirmed changes removes a game you own, changes a Game Pass subscription, or moves an announced release date. The decisions worth making are about how much to read into rumors, and which future announcements to watch.

If you play Halo, the games already on sale still have a named support team at Halo Studios, according to Microsoft. Your future plans now depend on a new Activision team that hasn't said anything publicly. The report that the next game is a full mainline entry comes from one outlet. Treat it as likely but unconfirmed until Activision or Xbox shows the game.

If you're a Game Pass subscriber, the useful news is State of Decay 3. Undead Labs going independent did not end its day-one Game Pass commitment, according to the memo and Variety. Obsidian's Grounded work and its Fallout collaboration continue under Bethesda. Nothing in the memo cancels a named game.

If you play on a Windows PC, the relevant changes are Age of Empires' studio moving to Activision, possibly after heavy layoffs, and Microsoft Casual Games, including Solitaire and Minesweeper, moving to King. Neither move comes with a documented product change yet. If one does, it will come from the new owners.

If you follow Ninja Theory or Arkane, don't treat either studio as closed. Ninja Theory is in a consultation on a proposed closure, and Microsoft says it is still exploring alternatives. Arkane's consultation runs through the end of 2026.

• Xbox confirmed 268 role eliminations on September 22, 2026, across Halo Studios, other first-party studios and the Xbox Game Studios central layer, as part of the 3,200-job reduction announced in July.
• The next Halo game will be developed by a new, purpose-built Activision team kept separate from Call of Duty, while a small Halo Studios team supports the Halo games already on sale.
• Rare and World's Edge move to Activision, Obsidian moves to Bethesda, Microsoft Casual Games moves to King, and Playground Games and Turn 10 merge into one Forza and Fable studio.
• The reported layoff list of Halo Studios, The Coalition, World's Edge, Treyarch and central Xbox Game Studios staff comes from Insider Gaming, and the outlet says it may be incomplete. The claim that just under half of World's Edge was cut is an unverified employee post.
• State of Decay 3 is still planned for day one on Game Pass after Undead Labs went independent, and Compulsion and Double Fine have been independent since August.
• Ninja Theory faces a proposed-closure consultation after two sale agreements collapsed, and Arkane's consultation continues through the end of 2026. Neither studio has been confirmed closed.

Microsoft has done most of what it planned in July. It has cut three-quarters of the jobs and rebuilt its studios around Activision, Bethesda, King and a merged Forza studio. The remaining questions are narrow and have dates attached. Booty says he will spend the next week visiting studios and hold an all-Xbox town hall on October 6. Ninja Theory's consultation now determines whether the Hellblade studio survives, and Arkane's will run until year-end. Until Microsoft says otherwise, the big franchises carry on under new owners. What's left to decide is how many more people and studios go in the final quarter of the reset.

Update: Additional details (September 22, 2026)​

Kotaku’s review of the restructure identifies the remaining Xbox Game Studios game-development teams as The Coalition, inXile Entertainment and the newly combined Playground Games–Turn 10 operation. Xbox Game Studios Publishing also remains as a separate publishing group.

The outlet reports that Xbox Game Studios Publishing continues to handle projects including Ninja Gaiden 4 and Kojima Productions’ OD and Physint. Microsoft’s September 22 memo did not spell out the status of that publishing unit or explicitly list inXile among the teams remaining under the central Xbox Game Studios umbrella.

Update: Washington filings point to a broader Xbox reduction (September 22, 2026)​

OPB reports that 268 Xbox employees are being laid off in Washington state, while a Microsoft spokesperson described the wider reduction in force as affecting roughly 500 to 600 workers. That suggests the 268 roles in Microsoft’s September 22 memo may not represent the full headcount impact of this stage of the restructuring.

Microsoft Chief Communications Officer Frank Shaw told OPB that no particular role was targeted and that the layoffs affected a broad cross-section of Xbox employees.