Xbox has taken a dramatic step in its ongoing corporate reshuffle, moving the storied UK developer Rare and the rights to the Halo franchise over to Activision, announcing that Ninja Theory will likely be shut down, and revealing another round of job reductions that affect 268 positions across Halo Studios, other first‑party studios, and Xbox Game Studios’ central functions. The announcement was made this morning in an Xbox Wire blog post, following earlier rumors that the company was preparing a wave of layoffs. In the official statement, Xbox explained that attempts to find a buyer for Ninja Theory had failed, prompting the company to start a formal consultation process regarding the studio’s proposed closure.
The post read, “Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward.” The same communication noted that discussions with Arkane Lyon remain ongoing and are expected to continue through the end of the year. The blog also clarified the future of the Halo franchise. Microsoft said the next Halo title will be developed by a brand‑new, purpose‑built team that operates independently from the current Halo Studios and from Activision’s Call of Duty pipeline.
A smaller group within Halo Studios will stay on to support the existing Halo community and maintain the live‑service aspects of the franchise. This restructuring mirrors the broader strategy laid out by Xbox CEO Asha Sharma, who has described the current phase as a "resetting of the business" aimed at concentrating resources on core intellectual properties while reducing organizational fragmentation. Key points of the restructuring include: - A total of 268 roles have been eliminated across Halo Studios, other first‑party studios, and Xbox Game Studios’ management and central operations. - Activision will expand its portfolio to incorporate Rare and World's Edge, the studio behind Age of Empires, and will take the lead on developing the next Halo game with a dedicated team separate from Call of Duty.
- Bethesda’s remit now covers Obsidian Entertainment, which will continue work on the upcoming Grounded title and a previously announced Fallout sequel. - King will absorb Microsoft Casual Games, broadening its casual‑gaming portfolio.
- Playground Games and Turn 10 Studios will merge into a single entity focused on the Forza and Fable franchises. - Undead Labs has exited 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. - Ninja Theory is slated for closure after two acquisition attempts fell through; a consultation process with staff has begun, though the company says it is still looking at alternative options. - Arkane Lyon remains in a consultation phase that will likely run until the close of the calendar year.
These moves are part of a larger wave of divestitures and layoffs that have already seen five studios spin out, including the recent independence of Compulsion Games and Double Fine. The restructuring also follows deep cuts at Zenimax Online Studios and other parts of the Xbox ecosystem. Rare, founded in 1985 and integrated into Xbox in 2002, continues to run the online pirate adventure Sea of Thieves.
Its most recent original project, Everwild, was cancelled amid the 2025 cost‑saving measures. Halo Studios, originally launched as 343 Industries in 2007, rebranded in 2024 and delivered Halo: Campaign Evolved earlier this year—a modern remake of the single‑player component of Halo: Combat Evolved (2001).
While Campaign Evolved earned generally favorable reviews, it was the studio’s first release since 2021’s Halo Infinite, a title whose development was marred by challenges with the in‑house Slipspace engine and allegations of mismanagement. Following Infinite’s launch, several senior leaders departed, and a further wave of redundancies hit the studio in 2023.
In 2024, Halo Studios announced a transition to Unreal Engine and a rebranding effort, promising "multiple new experiences" enabled by the new technology, though only Campaign Evolved has been publicly confirmed to date. The next Halo installment, according to Microsoft, will be overseen by a newly assembled team that operates independently of both the existing Halo Studios and Activision’s Call of Duty schedule.
A small contingent within Halo Studios will continue to provide live‑service support and community engagement for existing Halo titles. The announcement also referenced recent developments at Activision’s flagship shooter franchise. Treyarch, the studio behind the mainline Call of Duty series, recently declared it would be "moving on to something new" after completing the latest Black Ops entry.
Activision had previously pledged to revise its release cadence for Call of Duty after a string of back‑to‑back Black Ops launches that underperformed commercially. The historical context of Halo’s stewardship is worth noting. The franchise was originally created by Bungie, which split from Microsoft in 2007.
Bungie subsequently launched the Destiny series, published by Activision before being acquired by Sony in 2022—a deal that also saw Bungie undergo its own set of layoffs this year. Many Bungie veterans initially moved to 343 Industries to continue Halo, but most senior talent has since departed for other studios. Sharma’s broader vision appears to focus on consolidating the company’s two major shooter IPs—Halo and Call of Duty—under a more unified brand while investing heavily in other core franchises such as Fallout, Diablo, and StarCraft, all of which have received new development announcements in recent months. The comparatively slower release cadence of Halo Studios likely contributed to the decision to shift development responsibilities to Activision.
Xbox has publicly committed to cutting roughly 3,200 jobs in 2026 as part of Sharma’s restructuring plan. The latest announcement indicated the company is "roughly three‑quarters of the way through" that target, implying that about 800 additional positions may be eliminated before the goal is fully met. Studios not yet affected by the current wave include Blizzard Entertainment, The Coalition (the developers behind Gears of War), and InXile, which is working on Clockwork Revolution.
An update from Game Developer notes that an internal email sent to Blizzard staff by a senior leader confirmed that Blizzard was not impacted by today’s announcements, suggesting the studio remains insulated for the time being. Overall, the series of moves underscores Xbox’s intent to streamline its portfolio, focus resources on high‑impact franchises, and reduce operational overhead. While the departure of beloved studios like Ninja Theory and the loss of hundreds of jobs will undoubtedly affect morale and community perception, the company appears determined to reshape its structure to better align with its long‑term strategic priorities.