Microsoft’s Xbox ‘Reset’ Deepens: Halo Moves to Activision, Ninja Theory to Close, 268 More Jobs Cut

Microsoft’s Xbox division is undergoing one of the most significant restructurings in gaming history, with chief content officer Matt Booty confirming Tuesday that 268 employees are being laid off across Halo Studios, other first-party studios, and the Xbox Games Studios management team. In a memo to Xbox staff published Tuesday, Booty outlined the latest wave of changes to the company’s gaming business, including the long-awaited handover of the Halo franchise to Activision and the proposed closure of Hellblade developer Ninja Theory. The announcements mark the most consequential chapter yet in Microsoft’s ongoing effort to reshape its gaming portfolio amid intensifying competition and mounting pressure to trim its sprawling workforce.

The shake-up arrives as part of a broader strategic pivot that sees the company divesting from direct ownership of some of its most iconic studios. Activision will now oversee Rare and the Age of Empires studio World’s Edge, and it will take over development of the next Halo title. Booty emphasized that this new Halo effort will be “led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty,” while “a small team at Halo Studios will continue supporting the Halo community and games in-market.” The move reflects a calculated decision to align Halo’s future with Activision’s resources and expertise, even as Microsoft retains a lean internal presence to maintain community engagement.

A Franchise in Transition

The departure of Halo to Activision is perhaps the most emotionally charged element of the restructuring, given the franchise’s deep roots within Xbox’s identity. The transition is being managed carefully to preserve continuity, with Booty assuring staff that the in-market Halo team will remain active to support the community and existing games. This dual approach suggests Microsoft is prioritizing stability during what could be a lengthy and uncertain period for the series, particularly as the next mainline entry looms over the horizon.

Activision will now oversee Rare and Age of Empires studio World’s Edge. Activision will also be developing the next Halo title, 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.

Matt Booty, Chief Content Officer, Xbox

Meanwhile, the fate of Ninja Theory remains in flux. Booty confirmed that plans to find a buyer for the Hellblade studio fell through, and Microsoft “will now begin consultation with employees on a proposed closure while continuing to explore other paths forward.” The implications for the recently announced Senua, the follow-up to Senua’s Saga: Hellblade 2, are unclear at this stage, leaving fans and industry observers alike to speculate about the project’s future.

A Pattern of Consolidation

Microsoft’s latest round of layoffs follows previous cuts announced in July, when Xbox CEO Asha Sharma reduced the workforce by 1,600 jobs and committed to cutting a total of 3,200 staff over the next year. Those earlier cuts included entire studios such as Double Fine Productions and Compulsion Games, which were released from Xbox Game Studios and reverted to independent status, as well as Undead Labs and Ninja Theory, which were sold to unnamed third parties. The affected divisions spanned Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios, underscoring the breadth of the company’s restructuring.

Sharma framed the decision as a necessary response to a shifting competitive landscape. “We now find ourselves competing not only with the largest publishers, but also with smaller independent studios. It is neither possible nor desirable to own every great independent studio,” she said in a memo at the time. Alongside the layoffs, Sharma also promised to slash layers of management at Xbox to streamline work across teams, signaling a broader cultural shift toward leaner, more focused operations.

Looking Ahead

As the dust settles on this latest round of changes, the industry’s attention turns to how these studios and franchises will fare in their new configurations. The Halo handover to Activision sets a precedent for Microsoft’s willingness to divest from beloved properties in favor of strategic alignment, while the uncertain future of Ninja Theory and its Senua project highlights the human cost of consolidation. With consultations ongoing and further restructuring possible, the coming months will be critical in determining whether Microsoft’s “reset” delivers the efficiency and competitiveness it promises, or leaves a legacy of disruption across the studios that defined a generation of gaming.