Xbox Reorganizes Studios, Hands Halo to Activision and Merges Turn 10 With Playground

In a sweeping restructuring that marks the end of an era for some of gaming’s most iconic franchises, Xbox has announced it will continue consolidating its workforce and reshaping its first-party studios. Five months after laying off 3,200 employees, the publisher revealed that 268 additional staff across various departments are being let go, while four major brands — Halo, Fallout, Forza, and Fable — will be reorganized. In a new blog post, Xbox chief content officer Matt Booty confirmed that the next Halo title will be developed by Activision, signaling a dramatic shift in how one of the most storied franchises in gaming will be built from the ground up.

The announcement comes as Xbox pursues a leaner, more centralized approach to its portfolio, formalizing collaborations that had already been unfolding behind the scenes. Rather than scattering development across numerous internal teams, the publisher is consolidating expertise into fewer, more focused studios — a strategy that places seasoned developers directly in charge of the IPs they know best.

Halo’s Future Lands in Activision’s Hands

Perhaps the most seismic change concerns Halo itself. Booty confirmed that the next entry in the franchise will be developed by Activision, which will assemble a new team to lead the project. A smaller group of employees at Halo Studios will remain to provide support to the franchise, while Activision will continue overseeing the Call of Duty franchise as well. The move reflects a broader industry trend of handing marquee IPs to external partners capable of scaling development resources.

The next Halo title will be developed by Activision. The game will be produced by a new team, but a smaller group of employees at Halo Studios will continue to offer support to the franchise as well. Activision will continue overseeing the Call of Duty franchise.

Microsoft / Xbox

For fans, the transition raises questions about the franchise’s identity, but the publisher appears confident that the combination of Activision’s infrastructure and Halo Studios’ institutional knowledge will preserve the series’ legacy while refreshing its direction.

Obsidian Joins Bethesda, Fallout 5 Takes Shape

On the Fallout front, Obsidian Entertainment — the studio best known for Fallout: New Vegas — will now operate under Bethesda. The blog post states that Obsidian’s current projects, including the next Fallout game, will continue as planned. Per earlier reports, the new Fallout title is expected to be headed by New Vegas lead director Josh Sawyer, whose involvement has long been anticipated by the community.

Bethesda at large continues to focus on The Elder Scrolls 6, but the studio began pre-production on Fallout 5 earlier in 2026. The reorganization ensures that the team with the deepest expertise in the franchise remains at the helm, potentially smoothing the path toward a sequel that honors the series’ roots while embracing new creative ambitions.

Forza and Fable Unite Under One Studio

Meanwhile, Playground and Turn 10 will fully merge into a single studio dedicated to Forza and Fable. The consolidation aims to streamline racing and simulation development while expanding the studio’s reach into new territories. “King will expand its remit to include Microsoft Casual Games, uniting our two global leaders in casual game design and live operations,” the post continues, highlighting the publisher’s intent to strengthen its casual gaming presence alongside its core racing and simulation titles.

Many of these changes formalize inter-studio collaborations that were already happening behind the scenes. Obsidian, for example, was developing its Fallout game in partnership with Bethesda, and the restructuring simply makes that working relationship official.

Uncertainty Lingers for Other Studios

The restructuring arrives amid broader turmoil for Xbox’s developer roster. Earlier this summer, the publisher let go of studios including Compulsion, Undead Labs, and Double Fine. While those studios were able to retain their IP and back catalogs, the publisher revealed it was unable to work out an agreement with Devil May Cry studio Ninja Theory. Arkane, known for the stealth series Dishonored, remains in the middle of working out an arrangement with Xbox.

These departures and negotiations underscore the scale of Xbox’s transformation, as the publisher carefully balances talent retention against the need for a more focused, efficient development model.

Looking Ahead

Xbox says it will soon conduct a town hall with all of its remaining employees and studios to “reflect on our progress and look ahead to one of the strongest game lineups in our history.” The message from leadership is clear: despite the layoffs and reorganizations, the publisher remains committed to delivering a robust slate of titles built on the strength of its most experienced teams.

As the dust settles on this chapter of Xbox’s evolution, the industry will be watching closely to see how these structural changes play out in practice. Whether the consolidation delivers on its promise of stronger, more focused development remains to be seen — but one thing is certain: the era of Halo and Fallout as they once existed is officially over.