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

Activision now controls the Halo franchise, shifting its development and strategic direction away from Microsoft's direct oversight.

Microsoft has laid off 268 employees across its Xbox division, including those at Halo Studios and other first-party development teams. This is part of a broader "reset" and restructuring within Microsoft's gaming business, with a total of 3,200 roles previously slated for impact by June 2027. These latest cuts follow a significant layoff of 1,600 Xbox employees in July. In addition to the workforce reduction, Microsoft is divesting four of its Xbox studios. While Double Fine and Compulsion Games have become independent, a deal to sell Ninja Theory fell through, leading to potential closure proceedings. A deal to sell Undead Labs is still progressing, and consultations continue regarding Arkane and the Blade game. As part of this reorganization, Activision will assume responsibility for the Halo franchise, along with Sea of Thieves and World's Edge.

This strategic shift signals a significant re-evaluation of Microsoft's first-party studio model and IP management within its gaming division. By handing over key franchises like Halo to Activision, Microsoft is streamlining its operations and potentially leveraging Activision's established expertise in live-service games and broader market reach. This move also allows Microsoft to focus internal resources on other strategic priorities, potentially in emerging technologies or different game genres. The divestment of studios and the consolidation of major franchises indicate a market trend towards specialization and a more agile, partner-driven approach to game development and portfolio management.

The implications for developers and players are substantial, as the future direction and creative vision for beloved franchises will now be shaped by a different organizational structure. Developers may find new opportunities within Activision or face uncertainty as studios are closed or sold, impacting talent pools and project continuity. For players, this could mean a change in how franchises are updated, supported, and expanded, potentially influencing gameplay experiences and community engagement. This restructuring also highlights the intense competitive pressures and evolving business models in the gaming industry, pushing major players to make bold decisions to ensure long-term profitability and market relevance.