Xbox has taken a series of dramatic steps that reshape its internal studio landscape and its flagship franchises. In a single announcement posted on Xbox Wire, the company confirmed that the historic UK studio Rare, along with the ownership of the Halo franchise, will now be managed by Activision. At the same time, Xbox revealed that Ninja Theory is slated for closure, and it disclosed a further reduction of 268 positions across Halo Studios, other first‑party teams, and central Xbox Game Studios functions. The moves are part of a broader restructuring effort spearheaded by CEO Asha Sharma, who has described the process as a "resetting of the business." The blog entry explained that attempts to find a buyer for Ninja Theory had failed, prompting Xbox to begin a formal consultation with the studio’s staff about the proposed shutdown.
"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 statement read.
While Ninja Theory’s fate hangs in the balance, the company also noted that discussions with Arkane Lyon remain ongoing and are expected to continue through the end of the year. In parallel, the post highlighted a number of other studio realignments. Activision will broaden its remit to include Rare and World's Edge, the studio behind the Age of Empires series, and will take charge of developing the next Halo installment. This new Halo effort will be led by a "purpose‑built team" that operates independently of the current Halo Studios work and separate from Activision’s Call of Duty pipeline.
A smaller Halo Studios team will stay on to support the existing Halo community and maintain the live‑service aspects of the franchise. Bethesda’s responsibilities are also expanding.
The publisher will now oversee Obsidian Entertainment, which will continue development on the upcoming Grounded title and a yet‑unnamed Fallout sequel. King, the mobile‑gaming powerhouse, will absorb Microsoft Casual Games, while Playground Games and Turn 10 Studios will merge into a single entity focused on the Forza and Fable franchises. Undead Labs, the creator of State of Decay, has departed the Xbox umbrella under terms similar to those used for Double Fine and Compulsion Games, and will launch State of Decay 3 with a new publishing partner.
The headline figures are stark: 268 roles have been eliminated across Halo Studios, other first‑party studios, and Xbox Game Studios’ central management and support functions. This follows earlier waves of cuts that have already seen the departure of entire studios such as Ninja Theory, Undead Labs, Compulsion Games and Double Fine, as well as deep reductions at Zenimax Online Studios and id Software.
Microsoft has set a target of 3,200 job cuts for the year, and the latest announcement suggests the company is roughly three‑quarters of the way toward that goal, leaving an estimated 800 positions still at risk. Rare’s journey provides context for the scale of these changes. Founded in 1985 and acquired by Microsoft in 2002, Rare has delivered iconic titles ranging from GoldenEye to Sea of Thieves.
Its most recent original project, Everwild, was cancelled amid the 2025 layoffs, leaving the studio focused primarily on supporting Sea of Thieves. Halo Studios, originally formed 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 remake of the 2001 single‑player experience earned generally favorable reviews but was the studio’s first release since Halo Infinite in 2021, a game whose development was marred by challenges with the in‑house Slipspace engine and management turbulence. Following Infinite’s launch, several senior leaders left, and further redundancies were announced in 2023.
The studio subsequently switched to Unreal Engine and adopted the Halo Studios name in 2024, promising "multiple new experiences" that have yet to materialize. The decision to shift Halo’s future to an Activision‑led team reflects a strategic move to consolidate Microsoft’s two major shooter IPs—Halo and Call of Duty—under a single brand umbrella. Activision’s annual cadence of Call of Duty releases, while sometimes uneven in critical reception, provides a reliable revenue stream that contrasts with Halo Studios’ slower release rhythm. This realignment may also be intended to reduce fragmentation and focus resources on core properties, a theme echoed in recent announcements of new Fallout, Diablo and StarCraft titles.
Ninja Theory, best known for narrative‑driven games such as Hellblade: Senua’s Path, is currently working on the sequel to that critically acclaimed title. The studio’s uncertain future has raised concerns among fans and industry observers, especially after two potential deals fell through.
The consultation process will determine the final outcome, but Xbox has signaled that it continues to explore alternative options for the team. Other studios mentioned in the restructuring include Arkane Lyon, the creators of Dishonored and Prey, which remain in consultation through the end of the year, and Obsidian Entertainment, now under Bethesda’s umbrella, which will keep advancing Grounded and a Fallout sequel. The merger of Playground Games and Turn 10 aims to unify resources for the Forza racing franchise and the upcoming Fable project, potentially streamlining development pipelines and sharing technology. The broader picture underscores Microsoft’s aggressive cost‑cutting agenda.
While the company has pledged to invest heavily in its flagship intellectual property, it is also shedding what it deems non‑essential or underperforming assets. The recent departure of studios like Compulsion Games and Double Fine, which regained independence, illustrates a willingness to let go of subsidiaries that no longer fit the core strategy. In the background, Activision is also undergoing its own changes. Last week, Treyarch, the longtime steward of the Black Ops sub‑series, announced it would "move on to something new" after completing its latest Black Ops title, reflecting Activision’s shift away from back‑to‑back releases that had led to diminishing returns.
Finally, despite the sweeping cuts, several major studios remain untouched for now, including Blizzard Entertainment, The Coalition (the studio behind Gears of War), and InXile Entertainment, which is developing Clockwork Revolution. An email reported by Game Developer suggests Blizzard employees have been reassured that their studio is not part of today’s layoff round. Overall, Xbox’s latest restructuring moves signal a decisive pivot toward concentrating resources on its most profitable and strategically important franchises, while shedding peripheral studios and reducing headcount to meet aggressive financial targets. The full impact of these changes will unfold over the coming months as the newly formed teams begin work on the next Halo title and other flagship projects under the revised corporate architecture.