Microsoft Hands Halo to Activision for Next Mainline Game Amid Xbox Reset

Microsoft has confirmed that Call of Duty publisher Activision will develop the next mainline Halo game, marking one of the most significant realignments in the storied franchise’s history. The announcement, delivered by Xbox chief content officer Matt Booty, signals that the next entry in the sci-fi shooter series will follow 2021’s Halo Infinite and will be a “full-feature, mainline installment” rather than a spin-off or extension. The move is part of a broader effort to “reset” Xbox, and it comes as the company scales back its operations and consolidates around a smaller set of priority franchises.

Activision boss Rob Kostich framed the project as an ambitious undertaking, telling Game File that the studio is aiming to create “the greatest Halo game ever.” He said the goal is to build something “worthy of its universe and legacy, while staying true to what made players love it in the first place.” “It is a bold ambition, one that this franchise deserves,” Kostich added. “We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community.”

A New Team, a Clear Separation from Call of Duty

Booty clarified that Microsoft is putting together a “new, purpose-built team” to build the next Halo game at Activision, and that these efforts are “separate from ongoing development and plans for Call of Duty.” Despite years of speculation that a Call of Duty studio would be reassigned to Halo, the company is instead spinning up a fresh team. It remains unclear whether Activision’s Halo work will affect the Call of Duty franchise’s established annual release schedule or whether key personnel will move between the two properties.

Given Kostich’s comments about assembling a team from scratch, the project is in its earliest stages, and players should not expect to see a finished game any time soon. Xbox has a history of announcing titles years before they arrive, with Blizzard revealing a new StarCraft shooter for 2030 and Bethesda unveiling the unreleased Elder Scrolls 6 back in 2018.

The Winding Down of Halo Studios

The Halo game’s future at Activision arrives alongside a significant contraction of Halo Studios itself. According to Booty, only a “small team” will remain to “continue supporting the Halo community and games in-market,” while numerous staff members are being let go. This represents a major shift from the company’s October 2024 announcement, when Microsoft rebranded Halo developer 343 Industries as Halo Studios and outlined plans for multiple new titles, including new games built on the Unreal Engine.

Under that new charter, Halo Studios released Halo: Campaign Evolved in July 2026, a remake of the original game that was reportedly a commercial disappointment and notably lacked multiplayer support. Beyond Halo Studios, the 268 layoffs at Xbox this week extended to other teams, including Gears of War developer The Coalition, and the company has signaled that more cuts are coming.

Several projects were reportedly in development at Halo Studios, including a live-service game described as “like Fortnite” and remakes of Halo 2 and Halo 3. A Microsoft spokesperson declined to comment on the future of Halo Studios when approached by GameSpot.

A Priority for Xbox, a Skeptic’s View from the Inside

At Gamescom this year, Xbox CEO Asha Sharma said the Halo franchise remains “very key” to the company and that Microsoft is taking a long-term view on reviving it. “It represents a very key memory structure and way that people want to play,” she told the BBC. “I am focused on that. We’ll have more news to share on Halo going forward.”

Not everyone is convinced Microsoft can pull off a revival. Marcus Lehto, Halo’s co-creator and the designer of Master Chief, recently flagged a “big concern”: cost. He estimated that a “fully featured Halo” game could run between $600 million and $800 million and take four or more years to build. Lehto, who has not worked on the franchise in a long time, said he does not expect Microsoft to spend that much or take that long, describing the corporation as a “terribly inefficient machine.” “A smaller indie team driven by seasoned devs, filled with a good mix of newer hungry talent as well, and minimal management layers is probably the only viable way to make a great Halo again,” he said. Following the Activision announcement, Lehto described himself as “shocked but not entirely surprised.”

The Human Impact and the Road Ahead

The decision to hand Halo to Activision has come at a human cost for the people at Halo Studios. Beyond the layoffs, departures include Halo’s esports producer and cinematic director Josh Daniels, who had just been promoted in the past week. The broader wave of cuts has prompted questions about the studio’s identity, with observers asking what Xbox Game Studios looks like at this point in its restructuring.

Still, Halo carries deep brand recognition and is synonymous with the Xbox identity, which is unlikely to be abandoned entirely. Microsoft reportedly assigned Call of Duty developer Sledgehammer to conduct Halo experiments earlier this year, and that effort has now graduated into a full commitment to a brand-new game at Activision. Sharma noted that scaling back to “focus on higher-priority projects” was a deliberate bet to grow Xbox, and Halo sits alongside Fallout, The Elder Scrolls, Call of Duty, Minecraft, Fable, and Forza as one of the franchises the company intends to invest in going forward.

As for Halo Studios’ in-development projects, the shift in charter suggests they may well be dead, and the studio’s earlier plans to move to the Unreal Engine could be moot given Activision’s proprietary engine. With a purpose-built team still being assembled and no timeline in sight, the next chapter of Halo remains firmly in the future.

Looking Ahead

Microsoft has not provided a release window for the new Halo game, and given the early state of development, players should temper expectations for a near-term launch. The company has promised “more news to share on Halo going forward,” and the coming months will likely reveal details about the new team, its structure, and how the project fits into Xbox’s broader strategy. For now, the franchise’s revival rests on a bold ambition and a restructuring that is reshaping the studio that built it.