Xbox has announced a sweeping reorganization that sees the storied UK studio Rare and the rights to the Halo franchise transferred to Activision, the planned closure of Ninja Theory, and a further reduction of 268 positions across Halo Studios, other first‑party studios, and Xbox Game Studios’ central functions. The details were revealed in an Xbox Wire blog post released early this morning, confirming earlier rumors of a large‑scale layoff wave. In the official statement, Microsoft explained that attempts to find a buyer for Ninja Theory had been unsuccessful, prompting the company to begin a formal consultation process regarding the studio’s shutdown. The post read, “Two separate acquisition attempts for Ninja Theory fell through.
We will now commence consultation with employees about a proposed closure while continuing to explore alternative pathways.” At the same time, the company noted that negotiations with Arkane Lyon remain ongoing and are expected to continue through the end of the year. Key points of the restructuring include: - A total of 268 roles have been eliminated across Halo Studios, other first‑party development teams, and Xbox Game Studios’ management and shared services. - Activision will expand its portfolio to incorporate 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 project will be handled by a "purpose‑built" team that operates independently of existing development streams and the parallel Call of Duty roadmap. - Bethesda will broaden its remit to include Obsidian Entertainment, which will continue work on the upcoming Grounded title and the previously announced Fallout sequel.
- Microsoft Casual Games will now fall under the King umbrella, consolidating casual‑gaming efforts. - Playground Games and Turn 10 Studios will merge into a single entity focused on the Forza and Fable franchises.
- Undead Labs has departed 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 publishing partner. - Ninja Theory is slated for closure after the failed sale attempts, with a consultation process now underway for its staff. - Arkane Lyon remains in consultation, a process slated to run until year‑end. Rob Kostich, President of Activision, welcomed the additions, stating, “We’re thrilled to bring Halo, Rare, and World’s Edge into the Activision family.
It’s an honor and a responsibility we do not take lightly. These teams have inspired fans worldwide for decades.” He added, “Our goal for Halo is simple: create the greatest Halo game ever, one that respects its legacy and the elements that made players fall in love with the series. We’ve already begun assembling a unique, purpose‑built team ready to deliver the next chapter alongside the community.” The announcement is part of a broader restructuring effort described by Xbox CEO Asha Sharma as a "resetting of the business." Over the past months, Microsoft has divested five studios, including Ninja Theory and Undead Labs, while granting independence back to Compulsion Games and Double Fine.
The company has also executed deep cuts across its global workforce, with notable reductions at Zenimax Online Studios and others. Rare, founded in 1985 and acquired by Microsoft in 2002, currently supports the live service Sea of Thieves. Its most recent original project, Everwild, was cancelled amid the 2025 wave of Xbox cuts.
Halo Studios, originally launched as 343 Industries in 2007 to steward the Halo franchise after Bungie’s departure, rebranded in 2024 and delivered Halo: Campaign Evolved earlier this year. The studio’s latest release, a remake of Halo: Combat Evolved’s single‑player campaign, received generally favorable reviews but was its first major launch since Halo Infinite in 2021, a title whose development was marred by challenges with the in‑house Slipspace engine and management turbulence. Following the Halo Infinite saga, several senior leaders left the studio, and additional staff reductions were announced in 2023.
In 2024, the team announced a migration to Unreal Engine and a rebrand to Halo Studios, promising "multiple new experiences" enabled by the new technology. However, to date, only Campaign Evolved has been publicly confirmed.
Microsoft reiterated that the next Halo entry will be overseen by a new, purpose‑built team separate from ongoing projects and the Call of Duty pipeline. A smaller contingent within Halo Studios will continue to support the existing Halo community and maintain current live services. Meanwhile, the Call of Duty franchise is also undergoing change.
Treyarch, a longtime pillar of the series, announced it will "move on to something new" after completing the latest Black Ops title. Activision has previously signaled a shift in its Call of Duty release strategy after back‑to‑back Black Ops launches yielded diminishing returns. The restructuring aligns with Sharma’s stated objective of concentrating resources on core intellectual properties, a strategy reflected in recent announcements of new Fallout, Diablo, and StarCraft projects. By consolidating its two flagship shooter IPs—Halo and Call of Duty—under a more unified brand, Microsoft aims to reduce fragmentation and improve strategic focus.
The slower cadence of Halo releases compared to Activision’s annual Call of Duty schedule likely contributed to the decision to shift Halo development to Activision’s oversight. Xbox has set an ambitious target to eliminate 3,200 jobs this year as part of the ongoing overhaul. The latest announcement indicated the company is "roughly three‑quarters of the way through" this effort, suggesting that roughly 800 additional positions could be cut before the year ends. Studios not yet affected include Blizzard Entertainment, The Coalition (the studio behind Gears of War), and InXile Entertainment, the creators of Clockwork Revolution.
An update from Game Developer notes that an internal email sent to Blizzard staff by a senior leader confirms that Blizzard was not impacted by today’s layoff round, providing a brief respite for the storied studio amid the broader restructuring. Overall, the moves signal a decisive shift in Microsoft’s gaming strategy: consolidating marquee franchises under Activision, shedding studios that no longer fit the streamlined vision, and reallocating talent to ensure the next generation of Halo, Rare titles, and other key properties can be delivered with focused resources and renewed creative direction.