Microsoft hands Halo to Activision for next mainline game as Halo Studios shrinks

Microsoft is overhauling its Xbox business and has decided to assign the next mainline Halo game to Activision, the publisher behind Call of Duty. The move represents a major strategic shift for the sci-fi franchise, which struggled to meet expectations with 2021's Halo Infinite.

Xbox chief content officer Matt Booty announced the decision but provided few specifics. However, The Hollywood Reporter reported that Activision is developing a "full-feature, mainline installment" in the long-running series. Activision boss Rob Kostich said in a statement that Activision is trying to make the "greatest Halo game ever," one that is "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," Kostich said. "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."

Booty clarified that Activision's Halo development is "separate from ongoing development and plans for Call of Duty." A new team is being built at Activision rather than reassigning Call of Duty staff, though it remains unclear whether the arrangement will affect Call of Duty's established annual release schedule.

Players should not expect the game soon. Given the early stage of assembly, Xbox has shown willingness to announce games years in advance. Blizzard recently announced a new StarCraft shooter coming in 2030, while Bethesda revealed The Elder Scrolls 6 in 2018.

The decision has had immediate consequences for Halo Studios. According to Booty, only a "small team" at Halo Studios will "continue supporting the Halo community and games in-market." The studio is winding down significantly, with numerous staff losing their jobs, including Josh Daniels, Halo's esports producer and cinematic director, who had just been promoted.

In October 2024, Microsoft had announced that 343 Industries changed its name to Halo Studios and outlined plans for multiple new games using Unreal Engine instead of its proprietary Slipspace engine. Halo Studios released Halo: Campaign Evolved in July 2026 as its first game under the new name, though it was reportedly a commercial disappointment and notably lacked multiplayer support. That remains its only release.

Projects said to have been in development at Halo Studios included a new live-service game described as "like Fortnite" and remakes of Halo 2 and Halo 3. Given the studio's new direction, those projects appear unlikely to proceed. The shift to Unreal Engine may also be affected since Activision's Call of Duty games use proprietary engines. A Microsoft spokesperson declined to comment on the future of Halo Studios' in-development work.

Xbox CEO Asha Sharma has called Halo "very key" to Xbox and said the company is taking a long-term view on reviving the franchise. "It represents a very key memory structure and way that people want to play," she told the BBC. "I am focused on that. We'll have more news to share on Halo going forward."

Not everyone is optimistic about the revival. Halo co-creator and Master Chief designer Marcus Lehto expressed skepticism, saying he sees a "big concern" about the cost of reviving Halo. He estimated a "fully featured Halo" game would likely cost between 600 million and 800 million dollars and take four or more years to make. Lehto said he does not anticipate Microsoft spending that much or taking that much time. He also suggested a "smaller indie team driven by seasoned devs, filled with a good mix of newer hungry talent as well, and minimal management layers is probably the only viable way to make a great Halo again."

Following the Activision announcement, Lehto said he was "shocked but not entirely surprised."

The Activision assignment is part of a broader Xbox restructuring. Microsoft laid off 268 people across Xbox this week, affecting teams including Gears of War developer The Coalition. Xbox is focusing on higher-priority franchises including Call of Duty, Minecraft, Fallout, The Elder Scrolls, Fable, and Forza, with Halo now numbered among them.