After decades of resisting the gravitational pull of its vastly more commercially successful rival, Halo—the defining first-person shooter of Xbox—has fallen under the control of Call of Duty’s creators. As part of an ongoing wave of layoffs at Microsoft’s Xbox division, Activision has been handed stewardship of the franchise while Halo Studios, formerly 343 Industries, is being demoted to a support role for existing titles.
The restructuring was revealed by Xbox chief creative officer Phil Booty in an article on Xbox Newswire cheerily titled “continuing our reset.” According to Microsoft, 268 people are being laid off “across Halo Studios, other first-party studios, and the XGS management and central functions layer,” though details of exactly who is affected remain unclear. This latest round follows on-going axing-down of their Xbox gaming business, with the company having announced in July plans to eliminate 1,600 staff alongside a series of studio divestitures and closures. At that time, Microsoft stated its intention to reduce its workforce by 3,200 people overall over the next financial year.
The New Home for Halo
As part of the latest round of reductions, Xbox is merging several studios and reallocating projects across the organization. Booty confirmed that Activision will now develop the next Halo game “led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty.” Meanwhile, an Xbox Newswire article noted that “a small team at Halo Studios will continue supporting the Halo community and games in-market,” preserving some continuity for the franchise’s long-time custodians.
Halo Studios were founded in 2007 as 343 Industries to take charge of the series after creators Bungie regained their independence from Microsoft. Over the years, they developed and collaborated on a mixture of remaster projects and spin-offs, including Halo: The Master Chief Collection, alongside the full sequels Halo 4, Halo 5: Guardians and Halo Infinite. In 2024, the studio was renamed to signal a new start for Halo—albeit one marked by yet another remake project, with development shifting from the proprietary Slipspace Engine to Unreal Engine 5.
“A small team at Halo Studios will continue supporting the Halo community and games in-market.”
Phil Booty, Xbox chief creative officer
A Long-Standing Rivalry
The studio’s recent work, the announcement of plans, including the Halo: Campaign Evolved remake, doesn’t appear to have found much of a following, though Microsoft has yet to release full sales figures. Booty’s emphasis on differentiating Halo’s development under Activision from Call of Duty’s suggests he is anticipating angry responses from players for whom Call of Duty remains an ideological antagonist. The two shooters are historically very different: Call of Duty is defined by ADS, multiplayer progression, and small-scale infantry combat, whereas Halo functions more as a sandbox featuring vehicles, a longer time-to-kill, and a preference for on-map gadgets.
Call of Duty’s overwhelming commercial success has motivated or obliged successive generations of Halo developers to borrow increasingly from the Activision FPS. Yet even the recent Halo: Infinite feels like a very different beast to the latest Call of Duty release. For some observers, the notion of Halo operating under Call of Duty’s roof strikes as deeply strange—BDS boycott on Microsoft in light of their Israeli military connections notwithstanding for those who have already distanced themselves from the franchise.
Solidarity Among Affected Developers
Beyond the design implications, the human cost remains paramount. Messages of support for Halo Studios employees have begun appearing from other game developers on LinkedIn, including a call to arms from former 343 art director Glenn Israel, who left in October 2025. Israel has previously accused “senior Halo representatives” of driving him out, noting that company “restructuring” can serve as an opportunity for bosses to settle scores with troublesome employees. In a message to Halo developers affected by today’s events, he writes, “you are not alone and I have resources to share.” Former Halo Studios senior software development engineer Bill Rosas comments more simply, “good luck today, Halo friends.”
The broader picture of Xbox’s restructuring has drawn sharp criticism. As regards the company’s on-going efforts to reshape its business model by consolidating studios and assets, Julian notes that “Xbox may think they’re activating synergies across the portfolio setting themselves up for some great growth momentum next quarter,” but adds, “I just see a ball of mashed up Chewits.”
Looking Ahead
As Microsoft continues its financial-year restructuring plan targeting 3,200 workforce reductions, the Halo franchise now enters an uncertain chapter under Activision’s stewardship. While a small team at Halo Studios will maintain support for existing titles, the question of who will lead development of the next mainline entry—and whether that leadership can preserve the series’ distinctive identity—remains open. Players and industry observers alike are watching closely as Microsoft attempts to navigate its most significant organizational overhaul in years.
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