Xbox Hands Rare and Halo Franchise to Activition, Plans Ninja Theory Shutdown, and Announces Additional 268 Job Reductions Amid Studio Overhaul

In a sweeping announcement posted on Xbox Wire this morning, Microsoft revealed a series of dramatic organisational changes that will reshape its first‑party gaming landscape. The most headline‑grabbing move is the transfer of the iconic British studio Rare, along with the ownership of the Halo franchise, to Activision.

At the same time, the company confirmed that Ninja Theory is slated for closure after failed attempts to find a buyer, and it disclosed that a further 268 positions have been eliminated across Halo Studios, other internal studios and central Xbox Game Studios functions. The restructuring is part of a broader effort described by Xbox CEO Asha Sharma as a "resetting of the business," aimed at consolidating core intellectual property, reducing redundancy, and streamlining development pipelines. ### Key points of the restructuring - **Rare and Halo move to Activision**: The legendary studio Rare, best known for classics such as *GoldenEye 007* and *Banjo‑Kazooie*, will now operate under Activision’s umbrella.

In addition, the Halo franchise, which has been the flagship shooter for Xbox since Microsoft acquired Bungie’s rights, will also be managed by Activision. The new Halo title will be built by a purpose‑built team that is separate from the ongoing work on Call of Duty, while a smaller Halo Studios team will continue to support existing Halo titles and community services.

- **Ninja Theory slated for closure**: After two separate acquisition talks fell through, Microsoft has begun a formal consultation process with Ninja Theory staff regarding the proposed shutdown. The studio, known for narrative‑driven games such as *Hellblade: Senua's Sacrifice*, will continue to explore alternative pathways, but the immediate focus is on supporting employees through the transition. - **Additional layoffs**: A total of 268 roles have been cut across Halo Studios, other first‑party studios, and Xbox Game Studios’ management and central functions. This follows earlier rounds of reductions that have already impacted studios such as Zenimax Online Studios and id Software.

- **Other studio realignments**: - **Obsidian** will now sit under Bethesda, continuing work on *Grounded* and the announced Fallout sequel. - **King** expands its remit to include Microsoft Casual Games. - **Playground Games and Turn 10** merge into a single entity focused on the *Forza* and *Fable* franchises. - **Undead Labs** departs the Microsoft family under terms similar to those used for Double Fine and Compulsion Games, and will launch *State of Decay 3* with a new publisher on day one of Game Pass.

- **Arkane Lyon** remains in a consultation process that is expected to run through the end of the year. ### Background and context The restructuring comes after a series of strategic divestments and layoffs that have been ongoing since Sharma took the helm.

Over the past twelve months, Microsoft has spun off five studios, including the recent independence of Compulsion Games and Double Fine. The company has also announced an ambitious goal of cutting roughly 3,200 jobs this year, and the latest announcement suggests that about three‑quarters of that target have already been achieved, leaving an estimated 800 positions still at risk.

Rare, founded in 1985 and acquired by Microsoft in 2002, has been responsible for maintaining the live service *Sea of Thieves* and was working on the ambitious *Everwild* project before its cancellation in 2025 amid broader budget cuts. Halo Studios, originally launched as 343 Industries in 2007 to steward the Halo franchise after Bungie’s departure, rebranded in 2024 and released *Halo: Campaign Evolved* earlier this year, a remake of the original 2001 single‑player campaign.

While the remake received generally positive reviews, it marked the studio’s first release since *Halo Infinite* in 2021, a title whose development was plagued by challenges with the in‑house Slipspace engine and managerial turbulence. Following the *Infinite* cycle, several senior figures left the studio, and a wave of redundancies hit in 2023.

In response, Halo Studios announced a migration to Unreal Engine and a rebranding effort, promising “multiple new experiences” powered by the new technology. However, *Campaign Evolved* remains the only concrete project announced to date.

### Implications for Microsoft’s shooter portfolio By moving Rare and Halo under Activision, Microsoft effectively places its two flagship shooter IPs—Halo and Call of Duty—under a single corporate banner. This consolidation could streamline publishing, marketing, and cross‑title coordination, but it also raises questions about creative independence. Activision’s track record of delivering annual *Call of Duty* releases, often with mixed critical reception but strong commercial performance, contrasts with Halo’s historically slower release cadence.

The decision suggests that Microsoft is prioritising consistent revenue streams and reducing the fragmentation that has characterized its shooter development pipeline. The announcement also aligns with recent shifts in the broader industry. Activision’s parent company, now owned by Microsoft, has been adjusting its release strategy after back‑to‑back *Black Ops* titles underperformed financially. Treyarch, the studio behind the most recent *Black Ops* entry, announced it would be moving on to new projects, indicating a possible re‑evaluation of the franchise’s annual cadence.

### What this means for affected employees and the market The consultation process for Ninja Theory and Arkane Lyon follows the standard UK and EU practice of engaging with staff before finalising closures or further reductions. While the company states it is “continuing to explore other paths forward,” the immediate reality for employees is uncertainty and the need to consider severance packages, redeployment, or external opportunities.

From a market perspective, the transfer of Rare and Halo to Activision could make these studios more attractive to third‑party publishers seeking to leverage established IPs. It may also signal to investors that Microsoft is willing to make bold, albeit painful, moves to sharpen its focus on high‑margin, high‑visibility franchises like *Fallout*, *Diablo*, and *StarCraft*, which have seen new announcements in recent months.

### Looking ahead Microsoft’s restructuring is far from complete. With roughly 800 jobs still slated for removal, additional studios could face cuts or further realignment. Notably, Blizzard, The Coalition (the studio behind *Gears of War*), and InXile (developer of *Clockwork Revolution*) have not yet been directly impacted, though internal communications suggest they are monitoring the situation closely. In summary, the latest wave of changes underscores Microsoft’s determination to streamline its gaming division, consolidate its shooter franchises under Activision, and eliminate what it perceives as redundant or underperforming assets.

While the moves bring short‑term disruption—especially for the staff at Ninja Theory and the broader Halo development community—they also set the stage for a more unified strategy around Microsoft’s core IPs moving forward.