Microsoft has confirmed that Activision will develop the next mainline Halo game, accompanied by 268 layoffs primarily impacting Halo Studios as part of a sweeping corporate restructure.
Xbox is restructuring its first-party game development operations, handing over the reins of its flagship franchise to the maker of Call of Duty. The decision comes alongside 268 layoffs distributed across Halo Studios, other first-party studios, and central management functions. Xbox announced the 268 layoffs as part of the ongoing cuts first announced in July by new Xbox boss Asha Sharma, which had already seen 1,600 staff lose their jobs in the summer out of 3,600 planned losses overall. Microsoft said another 1,600 staff on top would also go this financial year.
Halo Shifts to Activision as Layoffs Hit Studio
The latest workforce reductions hit staff at the studio which currently makes Halo, with Activision stepping in to steer future titles in the franchise. Xbox Chief Content Officer Matt Booty outlined the scope of the ongoing reorganization in a blog post, stating that the actions completed since July, inclusive of the studio divestitures, bring the company roughly three-quarters of the way through its previously announced restructuring.
I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them. Content Officer Matt Booty
Matt Booty, Xbox Chief Content Officer
Booty added that while Halo Studios has been heavily downsized, a small team will continue supporting the Halo community and games in-market. With Halo moving to Activision, Microsoft is handing over a franchise that it originally purchased when it bought original developer Bungie in 2000. Bungie later split from Microsoft in 2007, and 343 Industries was subsequently set up to take Halo into a new era before changing its name to Halo Studios in 2024.
Activision Plans Purpose-Built Team for Franchise Future
Development on the next Halo title will be handled by a newly established division separate from ongoing development and plans for Call of Duty. Rob Kostich, president of Activision, detailed the publisher’s approach to taking over the series.
We’re thrilled to welcome Halo, Rare, and World’s Edge to Activision. It’s an honor and a responsibility that we do not take lightly. These teams and their games have inspired fans around the world for decades. For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy, while staying true to what made players love it in the first place. It is a bold ambition, one that this franchise deserves. We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community. To the World’s Edge and Rare teams, we can’t wait to get to work together.
Broader Xbox Restructuring and Studio Uncertainty
The summer overhaul initially cut 1,600 jobs amid plans for 3,600 total losses under Xbox chief executive Asha Sharma. Sharma stated in July that the Microsoft gaming division had not been healthy and that while Game Pass created meaningful value, it had not grown quickly enough. In an August interview with the BBC, she also pointed to the crisis in rising computing prices and hardware costs as another external pressure.
Alongside these changes, Age of Empires developer World’s Edge and Sea of Thieves developer Rare have been moved under the Activision umbrella. Meanwhile, attempts to sell Bafta-winning Ninja Theory failed after two separate agreements fell through. Booty wrote that Ninja Theory would now enter into consultation with employees on a proposed closure, though potential buyout talks are continuing, while consultation for Arcane remains under way and three other affected companies have returned to management.