Xbox Hands Rare and Halo Franchise to Activision, Plans to Shut Down Ninja Theory, and Announces Additional 268 Job Cuts Amid Studio Reorganization

In a sweeping announcement posted on Xbox Wire early this morning, Microsoft revealed a series of dramatic changes affecting several of its high‑profile studios. The most headline‑grabbing move is the transfer of the storied UK developer 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 two separate sale negotiations fell through, and it disclosed that a further 268 positions have been eliminated across Halo Studios, other first‑party teams, and central Xbox Game Studios functions.

This cascade of decisions is part of a broader restructuring effort championed by Xbox chief executive Asha Sharma, who describes the process as a "resetting of the business." ### Key Points of the Announcement - **Rare and Halo Move to Activision**: Activision will now oversee Rare and the Age of Empires studio World's Edge, and it will also take charge of developing the next Halo title. The new Halo project will be led by a purpose‑built team that operates independently of the ongoing development work and the parallel Call of Duty pipeline. - **Ninja Theory Closure**: After two failed attempts to find a buyer, Microsoft has initiated a consultation process with Ninja Theory staff regarding the studio’s proposed shutdown.

The company says it continues to explore alternative paths, but the consultation marks the first formal step toward closure. - **Additional Job Reductions**: A total of 268 roles have been cut across Halo Studios, other first‑party studios, and Xbox Game Studios’ management and central services.

This brings the overall layoff target for the year—3,200 jobs—roughly three‑quarters of the way to completion, leaving an estimated 800 more positions to be eliminated. - **Studio Realignments**: - **Obsidian** now falls under Bethesda’s umbrella and will keep working on *Grounded* and the announced *Fallout* sequel.

- **King** expands its remit to include Microsoft Casual Games. - **Playground Games** and **Turn 10 Studios** merge into a single entity focused on the *Forza* and *Fable* franchises. - **Undead Labs** has departed the Xbox family on terms similar to those used for Double Fine and Compulsion Games and will launch *State of Decay 3* with a new publisher. - **Arkane Lyon** remains in a consultation phase that is expected to continue through the end of the year.

### Background on the Studios Involved **Rare** was founded in 1985 and became part of the Xbox family in 2002. The studio is best known for classics such as *GoldenEye 007*, *Banjo‑Kazooie*, and more recently *Sea of Thieves*. Its most recent original project, *Everwild*, was cancelled amid the larger wave of cuts that swept Xbox in 2025.

The transfer to Activision signals a shift in Rare’s future direction, potentially aligning its creative output with Activision’s publishing model. **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. That title, a modern remake of the original 2001 single‑player campaign, earned generally favorable reviews but was the studio’s first release since *Halo Infinite* in 2021. *Halo Infinite* suffered a troubled development cycle, largely due to challenges with Microsoft’s in‑house Slipspace engine and criticism of management practices.

Following its launch, several senior leaders left, and the studio announced a migration to Unreal Engine, accompanied by a rebranding to Halo Studios. **Ninja Theory** is currently working on *Senua*, a project that has generated considerable buzz for its narrative depth and technical ambition. Despite this, the studio could not secure a buyer, prompting Microsoft to begin the formal consultation process required by UK employment law before any closure can be finalized.

The company has emphasized that it is still looking for alternative solutions, but the consultation marks a significant step toward a potential shutdown. **Undead Labs**, the creator of the *State of Decay* series, has been granted a clean exit from the Xbox portfolio. The studio will continue development of *State of Decay 3* and release it on day one of Game Pass under a new publishing arrangement.

### Implications for the Wider Xbox Ecosystem The transfer of Rare and the Halo IP to Activision consolidates Microsoft’s two flagship shooter franchises—Halo and Call of Duty—under a single publishing umbrella. This strategic alignment may streamline marketing, distribution, and development resources, but it also raises questions about the distinct identity of each series.

Activision’s track record of delivering annual *Call of Duty* releases, often with mixed critical reception, suggests that Halo could see a more frequent release cadence, potentially at the expense of the slower, narrative‑driven approach that characterized recent Halo titles. The layoffs and studio consolidations also reflect a broader trend within the industry toward leaner operations and tighter focus on core intellectual property. Microsoft has recently announced new entries in the *Fallout*, *Diablo*, and *StarCraft* series, signaling a commitment to investing in its most lucrative franchises while shedding peripheral projects and underperforming studios.

### Outlook and Future Developments Looking ahead, the next Halo game will be built by a newly formed, purpose‑built team that operates independently of both the ongoing Halo Studios work and the Call of Duty pipeline. A smaller, dedicated Halo Studios team will remain to support the existing community and manage live‑service elements for current titles. This bifurcated structure aims to accelerate development while preserving ongoing player support. Meanwhile, the fate of Ninja Theory remains uncertain.

The consultation process will involve discussions with employees about redundancy packages, potential redeployment, and timelines for any final shutdown. Industry observers will be watching closely to see whether another buyer emerges or if Microsoft ultimately decides to dissolve the studio. Finally, the announced 268 job cuts bring the total number of layoffs this year to roughly 2,400, leaving about 800 more to reach the 3,200‑job target set by Sharma’s restructuring plan.

Studios that have not yet been affected include Blizzard Entertainment, The Coalition (the team behind *Gears of War*), and InXile (developer of *Clockwork Revolution*). An email reportedly circulated among Blizzard staff indicates that the studio is not part of today’s announcements, suggesting it may be insulated for the time being. Overall, Microsoft’s latest moves underscore a decisive shift toward consolidating its most valuable franchises, streamlining development pipelines, and reducing organizational complexity. While the changes bring uncertainty for many employees and fans of the affected studios, the company appears committed to a leaner, more focused future for its gaming ecosystem.