Halo's Next Game Moves to Activision as Xbox Consolidates Studios

Microsoft has officially announced a major restructuring of its gaming division, moving Halo Studios under Activision Blizzard as part of a broader consolidation of Xbox's first-party studios. The next Halo game will be developed by Activision with a new, purpose-built team that operates separately from the annual Call of Duty development cycle.

The move comes as part of Microsoft's cost-cutting efforts announced earlier this year. In total, 268 positions are being eliminated across Halo Studios, other Xbox developers, and Xbox Game Studios management. A small team at Halo Studios will remain to support the Halo community and existing games currently in market.

Xbox chief content officer Matt Booty outlined the reasoning behind the reorganization in a letter to employees. "The goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise," Booty wrote. The restructuring places Xbox roughly three-quarters of the way through previously announced layoffs that began earlier in the year.

The consolidation affects several other studios beyond Halo. World's Edge, which develops the Age of Empires series, and Rare, known for Sea of Thieves, will also fall under Activision Blizzard's umbrella. Obsidian Entertainment and its projects, including a new Fallout game, will move under Bethesda's oversight. Playground Games and Turn 10 Studios, longtime creative partners on the Forza franchise and the upcoming Fable remake, will merge into a single studio.

Halo has faced significant challenges since the release of Halo Infinite. The franchise has struggled to maintain a strong player base and attract new players, prompting Xbox to make structural changes. In October 2024, 343 Industries rebranded its development studios as Halo Studios to secure the brand's identity and signal a fresh direction.

The shift of Halo to Activision marks an unusual move for the iconic franchise. Earlier this year, rumors circulated that Sledgehammer Games, a Call of Duty developer, had begun working on a Halo multiplayer prototype in June, though that project was reportedly canceled in July. The official move to Activision suggests a more formal, long-term commitment to rebuilding the franchise.

No details have been released about what the new Halo project will entail. The dedicated team structure separate from Call of Duty development suggests Activision is committing significant resources to the franchise, though the full scope and timeline remain unclear. Microsoft's broader consolidation appears designed to reduce overhead and align development efforts across its major franchises.