Xbox Moves Rare Under Activision; Sea of Thieves Unchanged

Xbox moves Rare under Activision, and Rare stays a Microsoft studio​

The change came in an internal memo from Xbox chief content officer Matt Booty, later published on Xbox Wire as "Continuing Our Reset." Activision will expand its remit to World's Edge (known for Age of Empires) and Rare (known for Sea of Thieves), and a new team will be created within Activision to develop the next Halo title. Variety, Game Informer, The Hollywood Reporter, GamingBolt and Wccftech all reported the same structure independently.

Rare was not sold. Activision has been part of Microsoft since Microsoft finished buying Activision Blizzard in October 2023, so this is an internal reshuffle of reporting lines inside one company. IGN Southeast Asia described Rare as being "put under Activision's umbrella." That is accurate as a description of the organization chart. It does not mean ownership changed or Rare was spun off.

Microsoft's stated reason is administrative. Booty wrote that the goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise. The memo doesn't explain how Rare fits that logic, what it will make next, or what changes day to day under an Activision reporting line.

Activision appears to welcome the arrival. In a staff message The Hollywood Reporter published alongside the memo, Activision's side wrote, "To the World's Edge and Rare teams, we can't wait to get to work together."

The 268 cuts and the rest of Xbox's September reorganization​

Rare's move was one line in a larger memo. The new cuts primarily affect Halo Studios, other first-party studios and the XGS management and central functions layer. Booty said the changes "bring us roughly three-quarters of the way through previously announced restructuring." The memo doesn't say whether any of the 268 roles were at Rare.

Several other studios moved at the same time:

The Halo decision drew most of the headlines. For Halo, the next game will be led by a new purpose-built team separate from Call of Duty work, while a small support group remains at Halo Studios to keep the community and live games running. The Rare worry follows the same pattern. Activision now runs Xbox's best-known shooter as well as Rare, so fans are asking whether its priorities will spread.

Windows users will notice the casual-games move. The Hollywood Reporter notes that the King business (Candy Crush) is taking in Microsoft Casual Games (Solitaire, Minesweeper), which are the titles most people know from Windows. Booty described it as uniting two groups with deep experience in casual game design and live operations. Neither the memo nor any outlet has announced changes to those games.

The memo also updated earlier divestitures. Compulsion Games and Double Fine went back to independent management in August, taking their IP, back catalogs and funding. Undead Labs has left on similar terms and will release State of Decay 3 on Game Pass on day one with a new publisher. Ninja Theory's future is now in consultation after two sale agreements fell through. Arkane's consultation in France is expected to run through the end of 2026.

Rare's move is part of the "Resetting Xbox" cost plan announced in July​

The Rare change reads more clearly against Xbox's July 6 memo, "Resetting Xbox," from the division's chief executive. That memo called the effort the most significant restructure in Xbox history. It set a reduction of about 3,200 roles across fiscal year 2027, with roughly 1,600 cut immediately, and said four studios would leave Xbox for new management. The latest reductions are simply the next round in a broader mission to reduce the staff size by 3,200, according to The Hollywood Reporter.

The July memo explained the finances bluntly. It said Xbox operates at margins three to ten times lower than comparable platform and publishing businesses. It said Game Pass, multiplatform publishing and a broader content portfolio "did not grow at the pace we expected," and that the industry faces its most severe hardware crisis. It also said that in a typical year Xbox lost 64 cents for every dollar it invested in part of its studio portfolio. It promised to cut management layers from as many as 14 to no more than five.

A June 10 memo gave more detail. Excluding Activision Blizzard King, Xbox said it had spent more than $20 billion over five years on content, platform and hardware subsidies while annual revenue fell by nearly half a billion dollars. It said console storage component prices had risen sharply and were expected to exceed five times their level of two years earlier by the 2027 holiday season.

Read that way, Rare's new reporting line looks like an effort to consolidate management rather than a verdict on the studio. The July memo also made a commitment that matters here: none of Xbox's publicly announced first-party games or projects were being canceled as part of those reductions. That promise covered the July cuts specifically. The September memo doesn't repeat it for the reorganization.

The memo says nothing new about Sea of Thieves​

The official record announces no change to Sea of Thieves servers, seasons, monetization, platforms, Game Pass availability or roadmap. Rare now reports into Activision. That is the whole confirmed change. IGN Southeast Asia acknowledges this: World's Edge (Age of Empires) and Rare (Sea of Thieves) will also fall under Activision's purview, and the outlet notes nothing has been explicitly outlined for Rare's future.

IGN's report is mostly about fan reaction, and the comments it quotes from Reddit are gloomy. One fan predicted Rare would end up "a CoD support team." Another said Activision's track record pointed to "mass layoffs, AI, crazy microtransactions." These comments show how the community feels, but they tell you nothing about Microsoft's internal plans. Nothing in the memo or the independent coverage says Rare has been assigned to Call of Duty, that Sea of Thieves will pick up new monetization, or that the roadmap has changed.

There is one real ambiguity. A move into another publisher's remit can change who approves budgets, sets live-service priorities, handles marketing and decides staffing. Microsoft hasn't said which of those, if any, will change at Rare. The outcomes fans fear are possible, and so is a light-touch arrangement where Rare keeps running Sea of Thieves as before. The public evidence doesn't point either way.

Why fans point to Neversoft when they think about Rare and Activision​

The fear has a history behind it. IGN Southeast Asia notes that Activision has in the past absorbed well-liked studios such as Neversoft, the Tony Hawk's Pro Skater developer, and put them on Call of Duty maps and support work. That pattern explains most of the Reddit anxiety, and it's why some fans fear Rare will become support staff instead of making its own games.

Other fans are hoping for the opposite. Given Rare's platformer history, some want Activision to give it a new Crash Bandicoot, an Activision-owned series, or a return to Banjo-Kazooie. No announcement, and no outlet reporting on this reorganization, has linked Rare to either franchise. For now it's wishful thinking.

The Halo arrangement is the closest official signal of how Activision may handle new work. Booty's memo explicitly kept the next Halo separate from Call of Duty: this "Halo" game will be "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. Microsoft hasn't given a similar assurance about Rare. It's also notable that the one Activision assignment it described in detail was built to stay out of the Call of Duty pipeline.

Rare's decade: Kinect, Sea of Thieves and the canceled Everwild​

Part of the worry comes from how little Rare has shipped recently. IGN Southeast Asia traces the arc. Rare thrived in the 1990s and 2000s, was put on Kinect projects in the early 2010s, and later had a hit with Sea of Thieves. Beyond that, it has released little of note.

The biggest blank is Everwild. Rare spent about a decade on the game, which IGN says was canceled last year after struggling to make progress, and the public saw very little of it. IGN argues that this record could influence whether Rare gets to make its own new games or becomes a support studio for Call of Duty and Halo. That's IGN's reading of Rare's position, not a statement from Microsoft.

Many fans also take some comfort that Rare wasn't closed or sold. Compulsion, Double Fine and Undead Labs were spun off this year, and Ninja Theory now faces a proposed closure. Next to those outcomes, being kept inside Microsoft under a large publisher is one of the milder results of the reset.

What Sea of Thieves, Age of Empires and Game Pass players should do now​

Nobody needs to do anything yet. Nothing announced on September 22 changes access to Sea of Thieves, Age of Empires or the casual games on Windows PCs, Xbox consoles or Game Pass. What's worth watching is how Rare's work is managed from here: season cadence, monetization changes, staffing news and any new project announcement. Those are the places where an Activision reporting line would first show up.

• Rare is now under Activision's management remit, and both remain part of Microsoft, so nothing about ownership or the sale of the studio has changed.
• Microsoft has announced no changes to Sea of Thieves servers, seasons, monetization, platforms or Game Pass availability.
• The memo doesn't say how many of the 268 eliminated roles were at Rare. It says the cuts fell mainly on Halo Studios, other first-party studios and central Xbox management.
• World's Edge, the Age of Empires studio, made the same move to Activision, and Microsoft Casual Games, which makes Solitaire and Minesweeper, now sits under King. No product changes were announced for either.
• The fan claims that Rare will become a Call of Duty support studio or make a new Banjo-Kazooie or Crash Bandicoot game have no backing in any official statement.
• Xbox has said it will hold an all-staff town hall on October 6, the next point where more detail on studio plans could come out, though Microsoft hasn't promised any.

Rare's move to Activision is the least drastic outcome of a restructuring that has already spun off three studios and put a fourth on track to close. The studio survives, keeps its best-known game, and gains a well-funded publishing organization as its manager. What it loses is independence over its own direction, and that direction is now set inside a publisher known for running Call of Duty. The first real evidence will come from Rare's next Sea of Thieves season plans or its next announced project. Booty's October 6 town hall, which he says will look ahead to "one of the strongest game lineups in our history," is the next date when Microsoft could explain what Activision plans for Rare.