Xbox Shakes Up Its Studios Again: Halo Goes to Activision, 268 More Jobs Cut

Xbox has unveiled the next phase of its sweeping corporate restructuring, consolidating a batch of studios under larger labels and laying off another 268 employees as it pushes toward a planned total of roughly 3,200 job cuts within the year. The shake-up, announced yesterday, hands Microsoft’s flagship Halo franchise to Activision, shrinks Halo Studios to a support role, and folds Rare and Age of Empires developer World’s Edge under the Activision banner, while Obsidian Entertainment moves to Bethesda, Turn 10 and Playground Games merge, and Ninja Theory enters consultation. The moves signal a decisive pivot toward fewer, genre-focused studios as Xbox leadership tightens its grip on the company.

The announcement arrives amid a broader reckoning at Microsoft’s gaming division, which has been trimming headcount and management layers since 2023. Analysts I spoke to described the changes as a mix of strategic logic and uncomfortable admissions, with some questioning whether the restructuring will ultimately strengthen or further erode Xbox’s competitive position against Sony and Nintendo.

A Reverse Acquisition In Slow Motion

The most striking element of the announcement is the transfer of Halo to Activision. Halo Studios is being reduced to a support team, ending what some call a fifteen-year experiment in in-house stewardship of the franchise.

“The publishers Xbox spent a fortune acquiring are now absorbing the studios Xbox built.”

Joost van Dreunen, NYU Stern professor and author of SuperJoost Playlist

Van Dreunen, who wrote about the announcement yesterday, framed the shift as “a reverse acquisition in slow motion.” Halo, Rare, and World’s Edge now report to Rob Kostich, meaning Microsoft’s most iconic franchise, its longest-held British studio, and its flagship real-time strategy series all fall under the publisher it paid $69 billion for three years ago. The implicit bet is that the Call of Duty machine can do for Halo what it does every year for its own franchise.

Several analysts I reached out to saw some logic in the genre-based regrouping. Newzoo director of market intelligence Manu Rosier pointed out that the smaller studios have been folded into larger houses working in the same genre: “Activision leads shooters, Bethesda leads role-playing games, King leads casual, and Playground leads racing.” One leadership per genre can plan releases across all its games, he said, which stops Microsoft titles from competing with each other for the same players and avoids gaps in the calendar.

Supporting that view, Rosier cited Newzoo data showing that since January 2025, players of Obsidian’s Avowed and The Outer Worlds 2 were more than three times more likely than average to also play Bethesda’s Starfield or The Elder Scrolls IV: Oblivion Remastered. Yet those titles launched just two months apart in 2025, and Newzoo data shows PC and console playtime was flat that year. In a market this competitive, he said, it makes sense to place fewer bets, each made by the most experienced team.

Like With The Other Shifts, Some See Silver Linings

Like with the other shifts, some analysts see some silver linings to Activision taking on Halo. “The upshot of today’s announcement is that Activision is absorbing Xbox rather than the other way around,” van Dreunen said. “Halo, Rare, and World’s Edge now report to Rob Kostich, which means Microsoft’s most iconic franchise, its longest-held British studio, and its flagship RTS all sit inside the publisher it paid $69 billion for three years ago. Reducing Halo Studios to a support team ends a fifteen-year experiment in in-house stewardship and is a plain admission that it didn’t work, so the bet now is that the Call of Duty machine can do for Halo what it does every year for its own franchise.”

Rosier seems to agree, and suggests that Halo and Call of Duty could “take turns.” “Shooters are more competitive than ever. Newzoo data shows their share of PC and console playtime fell from 39.6% to 34.8% in 2025, with both Fortnite and Call of Duty declining. That puts pressure on Call of Duty’s annual release. Halo can relieve some of it because it reaches different players: since January 2025, fewer than 3% of Call of Duty players also played Halo Infinite.”

However, in Rosier’s opinion, Rare and World’s Edge feel like odd ones out. “Sea of Thieves and Age of Empires sit outside Activision’s shooter portfolio, and genre does not explain the move. It is the one part of the regrouping without a clear genre logic, which makes it the move to follow.”

Elliott had even less optimism about this particular change. “Handing Halo to Activision and cutting Halo Studios down to a support team is essentially a demotion. It’s wild, as Halo was the franchise that sold Xboxes. In our data the Campaign Evolved remake landed respectably but nowhere near what Halo used to mean. But part of that is because of the lack of online multiplayer.”

He added that Rare and World’s Edge is about publishing muscle, not creative fit: “Sea of Thieves and Age of Empires have nothing in common with Call of Duty except they now sit under the group Xbox trusts to operate at scale.”

Looking Ahead

Everyone I spoke to had less to say about Ninja Theory, likely due to the obscurity around what had actually happened with the two deals for the studio that fell through. Rosier posited that “investors may be wary of single-player games with a niche audience,” while van Dreunen put it this way: “The Ninja Theory situation is the most troubling item. When two sale agreements collapse for the studio behind Hellblade, it tells you the 2018 acquisition spree bought talent that turns out to be hard to sell and expensive to keep. It’s a costly lesson and one I hope Xbox and its peers will remember during the next cycle.”

Dr. Serkan Toto of Kantan Games was unsurprised when I emailed him. “I already predicted earlier this year Asha Sharma will run through the Xbox business like a bulldozer, and sadly, this has now become reality.” Toto brought up several major concerns he has about the move overall. He’s worried that studios “might lose their identity and soul” by merging with others, such as Halo with Activision or Obsidian with Bethesda. And he’s worried this reorganization will better enable Sharma to sell off studios or disband them if things don’t go well, which, he noted, they very well may not.

“Success is not guaranteed,” Toto said. “If this restructuring does not work, we might look at even more pain in the years going forward. One thing is clearer than ever: Project Helix must absolutely hit.”