Xbox Cuts 268 More Jobs, Moves Halo to Activision and Consolidates Studios

Xbox eliminated 268 positions across Halo Studios, other first-party studios, and management functions on Tuesday, continuing the company's planned restructuring for 2026. Chief Content Officer Matt Booty announced the cuts in a memo to staff, framing the layoffs as part of a broader reset to streamline operations and strengthen franchises.

The latest reduction brings Xbox roughly three-quarters of the way through previously announced restructuring. Microsoft initially announced 3,200 job cuts across the entire company in July, with 1,600 of those cuts expected to continue through 2026.

Booty acknowledged the toll on affected employees. "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," he wrote in the memo.

The reorganization reshuffles how Xbox's studios operate. Activision will expand its responsibilities to include World's Edge and Rare, and will now lead development of the next Halo title with a new, purpose-built team separate from ongoing Call of Duty development. A small team at Halo Studios will remain to support existing Halo games and community engagement.

Bethesda's remit expands to include Obsidian Entertainment, which will continue current projects including Grounded and a new Fallout title being developed in collaboration with Bethesda Game Studios. King, Microsoft's mobile gaming division, will absorb Microsoft Casual Games to unite the company's casual game and live operations expertise.

Playground Games and Turn 10 Studios will merge into a single studio focused on Forza and Fable. "These two studios have been creative and franchise partners for over a decade, and today's changes will formally move their work into one team," Booty said.

Microsoft's studio divestiture plans also advanced. Compulsion Games and Double Fine Productions returned to independent management in August with their intellectual property, back catalogs, and funding secured. Undead Labs completed a similar transition and will release State of Decay 3 on day one with Game Pass under a new publisher.

Ninja Theory faces uncertainty following two failed partnership agreements. Xbox will begin employee consultation on a proposed studio closure while exploring alternative options. Consultation with Arkane Studios remains ongoing and is expected to continue through year's end.

Booty stated that Xbox leadership will visit studios over the coming week and hold an all-hands town hall on October 6 to discuss progress and upcoming game releases. "We will come together as an ALL-XBOX team to reflect on our progress and look ahead to one of the strongest game lineups in our history," he wrote.