Microsoft's Xbox division cut 268 more jobs on Tuesday, September 22, 2026, and used the same announcement to redraw its studio map. The biggest change: the next Halo game will no longer be made by Halo Studios. It moves to Activision, which also takes over Rare and Age of Empires developer World's Edge. Obsidian moves under Bethesda, Playground Games and Turn 10 Studios merge into a single Forza and Fable studio, and Microsoft Casual Games folds into King. Bloomberg was among the first to report the job cuts and the Activision consolidation that day.
The changes were laid out in a staff memo from Xbox chief content officer Matt Booty titled "Continuing our reset," which Insider Gaming, Gematsu and MobileSyrup all published in full or in part the same day. Booty framed the reorganization as a way to "strengthen our franchises and games by operating fewer business units," per GeekWire's report. In practice, Xbox is swapping a long list of semi-autonomous studios for a handful of larger publishing groups built around its biggest brands.
Halo goes to the Call of Duty publisher
The headline move is Halo. Per Booty's memo, as quoted by MobileSyrup, development of the next Halo title 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 stay on to support the Halo games already on the market. Activision president Rob Kostich said the publisher has "already begun assembling a purpose-built team, unique in capability and talent," according to GeekWire.
That wording matters. Activision is best known for running Call of Duty as a yearly, multi-studio production, and the memo explicitly walls the new Halo team off from that machine. What it doesn't say is where the team will be based, how many people it will have, which engine it will use, or when the next Halo game will ship. None of those details were in the announcement, and Microsoft hasn't given a release window.
The 268 cuts themselves landed partly on Halo Studios. Per Booty's memo, the eliminated roles span Halo Studios and other first-party studios, Xbox Game Studios management, and the division's "central functions" team. Microsoft hasn't published a per-studio breakdown.
The rest of the new org chart
Outside Halo, the reorganization groups studios that already share franchises or genres. According to Gematsu's summary of the memo, Activision's expanded remit now covers Rare and World's Edge alongside Halo. Bethesda picks up Obsidian Entertainment, which will keep working on its current projects, including Grounded, as well as a new Fallout project made in collaboration with Bethesda Game Studios, per Booty's memo. Fallout: New Vegas developer Obsidian working on Fallout again under Bethesda's direct oversight is one of the few pieces of the announcement that reads as new creative news and not just a reshuffle.
Playground Games, which makes Forza Horizon and the upcoming Fable, merges with Forza Motorsport developer Turn 10 Studios. The memo describes the combined group as one studio focused on the Forza and Fable franchises. King, the Candy Crush maker, absorbs Microsoft Casual Games, the team behind Microsoft's Solitaire collection and other casual titles, uniting what the memo calls "two global leaders in casual game design and live operations."
Activision: the next Halo (new team), Rare, World's Edge. Bethesda: Obsidian Entertainment. Merged: Playground Games + Turn 10 Studios (Forza and Fable). King: Microsoft Casual Games. Halo Studios keeps a small team supporting existing Halo games. Source: Matt Booty's September 22 staff memo, as published by Insider Gaming and Gematsu.
Ninja Theory faces possible closure; Arkane still in limbo
The memo also updated the studio divestitures Xbox announced earlier in its restructuring. Compulsion Games and Double Fine returned to independent management in August with their intellectual property, per Gematsu, and Undead Labs was also spun out. MobileSyrup reports that State of Decay 3, Undead Labs' next game, will still launch day one on Game Pass.
Not every sale went through. Two separate agreements for Hellblade developer Ninja Theory fell through, according to the memo, and Xbox will now "begin consultation with employees on a proposed closure" while it continues to explore other options, per MobileSyrup. Consultation over Arkane's future is ongoing and is expected to run through the end of 2026, per Gematsu. Neither studio's fate is settled yet, and it would be wrong to report either as closed.
Where this fits in the bigger cuts
Tuesday's cuts are not a new program. They're the latest step in a restructuring Microsoft announced in July, when it said Xbox would shed about 3,200 roles by the end of its fiscal year, roughly 20% of the division, per GeekWire. MobileSyrup reports Xbox said at the time it would cut 1,600 roles right away and another 1,600 over the following twelve months. In the memo, Booty wrote that "the actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring," per Insider Gaming. That leaves roughly a quarter of the planned reduction still to come.
The wider Microsoft picture is larger still. GeekWire's Todd Bishop reports that the cuts disclosed this week total about 600 globally, including about 300 in Washington state, with 268 of those in Xbox Game Studios. The same report notes Microsoft eliminated 4,800 jobs globally in July, about 2% of its workforce, and more than 15,000 across two rounds in 2025. GeekWire also reports that about 30% of roughly 8,750 eligible U.S. employees took a voluntary buyout offered as part of this year's cuts.
Xbox CEO Asha Sharma has previously called this effort "the biggest restructuring in Xbox history," per GeekWire. MobileSyrup points out the tension in that story: even as the division shrinks, Sharma has set a goal of reaching 500 million daily users by 2030, which MobileSyrup describes as nearly five times Xbox's current reach.
What to watch next
Booty's memo says Xbox will hold a town hall on October 6 to cover restructuring progress and upcoming game releases, per Insider Gaming. That's the next likely point for more detail on the Halo team, the Playground and Turn 10 merger, and the final quarter of the planned cuts. GeekWire also expects a Washington state WARN notice, which would list affected roles at the state's Xbox sites in more detail.
The strategic read is straightforward. Xbox is consolidating around a few publishing labels that already run huge franchises: Activision for shooters and now Halo, Bethesda for its RPGs plus Obsidian, King for casual and mobile, and a merged Playground/Turn 10 for Forza and Fable. That means fewer independent studio identities inside Xbox, and it puts Halo, the franchise that launched the original Xbox in 2001, under the company that makes Call of Duty. Whether that produces a better Halo is a question nobody can answer until a new team exists and ships something. For the 268 people cut on Tuesday, and for the staff at Ninja Theory and Arkane still waiting on consultations, the immediate consequences are much clearer.
Is Halo Studios closing?
No. Per Matt Booty's memo, a small team at Halo Studios will keep supporting the Halo games already on the market. Development of the next Halo title moves to a new team at Activision.
Will Call of Duty developers make the next Halo?
Not according to Microsoft. The memo says the new Halo team is separate from ongoing Call of Duty development and plans. Activision hasn't said where the team is based or how large it is.
Has Ninja Theory been shut down?
Not yet. Two deals to sell the studio fell through, and Xbox says it will now consult employees on a proposed closure while still looking at other options.