Xbox cuts 268 jobs and hands the next Halo game to Activision

Xbox announced on September 22, 2026 that it is cutting 268 jobs and reorganizing its game studios, with Activision taking over development of the next Halo game. The changes are part of a restructuring that Xbox began over the summer, according to Engadget and The Game Business.

Halo moves to Activision

Under the new structure, a small team at Halo Studios will remain to support existing Halo games, while Activision will develop the next entry in the series, Engadget reports. Activision now also oversees Rare, the studio behind Sea of Thieves, and World's Edge, which makes the Age of Empires games.

Activision president Rob Kostich welcomed the move, according to The Game Business: "We're thrilled to welcome Halo, Rare, and World's Edge to Activision. It's an honor we do not take lightly."

The 268 job cuts fall across Halo Studios, other first-party teams and the Xbox Game Studios central organization, The Game Business reports.

Other studio changes

The reorganization touches several other teams. According to Engadget:

  • Obsidian moves under Bethesda and will focus on a new Fallout game.
  • King will oversee Microsoft Casual Games.
  • Playground Games and Turn 10 are merging to continue work on Forza and Fable.
  • Compulsion Games and Double Fine Productions are being spun out as independent studios with funding and rights to their games.
  • Undead Labs is becoming independent again.

Undead Labs head Philip Holt said: "Independence brings us closer to our community and lets us focus on what matters most." Engadget reports that State of Decay 3 is still scheduled for release in 2026 on Xbox, PC and PlayStation.

Xbox executive Matt Booty explained the reasoning. "The goal is to strengthen our franchises by operating fewer business units and aligning groups that work closely together," he said, as quoted by The Game Business. Engadget quotes him adding: "The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring."

Ninja Theory and Arkane Lyon

Ninja Theory faces a possible shutdown. Engadget reports that two separate agreements to sell the studio fell through, and that Xbox will consult with employees on a proposed closure while it continues to look at alternatives.

Arkane Studios in Lyon is also being divested. Engadget reports that consultation is expected to run through the end of 2026 to decide whether the studio will be sold, spun out or closed.

Why it matters

The move puts the Halo series under Activision, and shrinks the number of separate studio groups inside Xbox. Booty described the restructuring as roughly three-quarters complete, and staff at Ninja Theory and Arkane Lyon wait for the outcome of consultations.

Sources

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.