Xbox is entering another phase of its companywide overhaul, with Microsoft changing who oversees several major studios, cutting more jobs, and handing development of the next Halo game to a newly formed team inside Activision.
The latest round of changes affects some of the biggest names under the Xbox umbrella, including Halo Studios, Rare, World’s Edge, Obsidian Entertainment, Playground Games, Turn 10 Studios, and Microsoft Casual Games.
Microsoft confirmed that 268 additional positions are being eliminated across Halo Studios, other first-party teams, Xbox Game Studios management, and central operations. The cuts come after a much larger restructuring plan announced in July that called for roughly 3,200 job reductions during the company’s 2027 fiscal year.
Xbox Chief Content Officer Matt Booty detailed the latest changes on Sept. 22 and said Microsoft is now about three-quarters of the way through the restructuring announced earlier this year.
The most noticeable change involves Halo. Instead of keeping the next game entirely inside Halo Studios, Microsoft is creating a dedicated development team within Activision to lead the project. That group will operate separately from Activision’s work on Call of Duty.
Halo Studios will not disappear. A smaller team will remain in place to support the existing games and the Halo community.
Activision’s responsibilities are also expanding beyond Halo. The publisher will now oversee Rare and World’s Edge. Rare is the studio behind Sea of Thieves, while World’s Edge manages the Age of Empires franchise.
Obsidian Entertainment is moving under Bethesda’s oversight. Microsoft said Obsidian will continue work on Grounded and is also developing a new Fallout project with Bethesda Game Studios.
Two of Xbox’s racing studios are also being combined. Playground Games and Turn 10 Studios will operate as a single studio responsible for the Forza and Fable franchises. Playground is best known for Forza Horizon, while Turn 10 created Forza Motorsport.
Microsoft is making a similar change on the casual-gaming side. King, best known for Candy Crush, will take over Microsoft Casual Games, which includes titles such as Microsoft Solitaire Collection.
Some studios are moving outside Xbox entirely.
Compulsion Games and Double Fine Productions returned to their management teams in August. Those deals included their intellectual property, back catalogs, and funding intended to support future development.
Undead Labs has now completed a similar transition. The studio will continue developing State of Decay 3 with a new publisher, although Microsoft says the game will still launch on Xbox Game Pass on day one.
Ninja Theory faces a more uncertain future. Microsoft said two separate attempts to move the Hellblade developer to new ownership did not go through. Employee consultations have started over a possible closure while Microsoft continues to consider other options.
Arkane is also still being evaluated. Microsoft expects discussions about the studio’s future to continue through the end of 2026.
The restructuring is changing how Xbox manages its first-party business. Instead of keeping as many studios operating under separate leadership structures, Microsoft is grouping more teams under larger organizations such as Activision, Bethesda, and King.
Game Informer also reported on the changes, including the job cuts and Activision’s new role with Halo.
More details could come soon. Matt Booty said Xbox leadership plans to discuss the next phase of the restructuring during a company town hall scheduled for Oct. 6.
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