Xbox Restructures Studios, Moving Halo Under Activision Control

Microsoft is restructuring its gaming studios in a major reorganization aimed at reducing operational independence and consolidating management layers. The changes represent the latest phase of Xbox's broader "reset" announced in July.

Halo Studios, formerly known as 343 Industries, will move under Activision's control as part of the shift. The studio will operate as a small team focused on supporting the player community, with remaining staff eliminated as part of 268 newly announced layoffs. Activision President Rob Kostich stated: "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."

Activision, acquired by Microsoft nearly three years ago, will now oversee additional studios including Rare (Sea of Thieves) and World's Edge (Age of Empires stewards). The publishing giant will assemble a dedicated team to work on the next Halo title.

In other moves, Obsidian Entertainment becomes part of Bethesda and will continue development on a new Grounded game alongside a new Fallout project created in collaboration with Bethesda Game Studios. Microsoft Casual Games will report to Candy Crush studio King. Playground Games and Turn 10 are merging into a single team to work on Fable and Forza franchises.

Microsoft remains actively seeking buyers for Ninja Theory and Arkane Studios. The company has already divested Compulsion Games, Undead Labs, and Double Fine Productions, with Double Fine having regained independence following its 2019 acquisition.

Xbox CEO Asha Sharma previously cited organizational challenges, noting that some work passes through "as many as 14 layers of management," resulting in slowed decisions and reduced accountability. The restructuring aims to reduce these layers and align teams that work closely together. Microsoft states it is "roughly three-quarters of the way" through planned 3,200 layoffs announced in July.