Microsoft lays off 268 Xbox employees across Halo Studios and other studios, as part of an ongoing gaming "reset"; Activision will take over Halo and two others

Microsoft is shifting development of the Halo franchise and other key studios to Activision, changing which entity controls these game franchises.

Microsoft has laid off 268 employees from its Xbox division, continuing a significant restructuring of its gaming business. These layoffs affect various first-party studios, including those working on Halo, as well as management and central functions. This action is part of a larger plan to cut 3,200 roles by June 2027, with approximately three-quarters of the planned restructuring now completed since July. In parallel, Microsoft is divesting four Xbox studios. While Double Fine and Compulsion Games have successfully transitioned to independent operations, the sale of Ninja Theory has stalled, leading to a proposed closure pending further buyer discussions. The future of Undead Labs is also being sold, with terms similar to other divested studios. Consultations are ongoing regarding Arkane and the Blade game, adhering to French labor laws. Additionally, the Halo franchise, along with Sea of Thieves and World's Edge studio, will be managed by Activision.

This wave of layoffs and studio divestitures signals a strategic pivot for Xbox, focusing on core franchises and potentially outsourcing development for others to a newly acquired powerhouse like Activision. The move suggests a prioritization of efficiency and profitability over maintaining a broad portfolio of internal studios, aiming to streamline operations and leverage existing successful publishing arms.

The consolidation of franchises like Halo under Activision's management indicates a broader industry trend toward integrating acquired IP into established publishing structures for faster monetization and development. This strategy could lead to more consistent release schedules and potentially a more unified vision for long-running series, though it raises questions about creative autonomy for developers previously independent within Xbox Game Studios.