Microsoft confirmed today that Activision will develop “the next Halo title,” but the announcement comes with a wave of layoffs and a massive reorganization of Xbox’s internal studios. The company announced 268 layoffs, “across Halo Studios, other first-party studios, and the XGS management and central functions layer,” with the majority of the cuts at Halo Studios.
The moves are part of a “reset” of Microsoft’s gaming business under new Xbox boss Asha Sharma. Xbox Chief Content Officer Matt Booty said the actions bring the company “roughly three-quarters of the way through previously announced restructuring,” including studio divestitures.
The Handover to Activision
Bungie was bought by Microsoft in 2000, and it then split from Microsoft in 2007, becoming independent once more. After Bungie left, development of Halo was taken over by 343 Industries, which was named after 343 Guilty Spark from the Halo games.
The studio’s recent history has been rocky. 2012’s Halo 4 was the first Halo game released by 343, followed by 2015’s Halo 5: Guardians and 2021’s Halo Infinite. Halo Infinite struggled, and this year’s Halo: Campaign Evolved remake suffered problems as well.
In 2024, 343 Industries changed its name to Halo Studios and announced plans for multiple new Halo games on Epic’s Unreal Engine. Halo Studios showcased Project Foundry — a tech demo of a Halo game built using Unreal Engine — ahead of the Halo World Championship’s grand finals.
The Activision Umbrella
Several Xbox studios have been placed under the Activision label, including World’s Edge, the maker of Age of Empires, and Rare, the developer behind Sea of Thieves.
Activision president Rob Kostich said: “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.” “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,” Kostich added.
Studios Shifted Across the Board
Microsoft’s Xbox reset has also shifted other studios across the board:
- Obsidian, developer of Grounded, The Outer Worlds, and Avowed, is now a Bethesda studio, working on a new Fallout game.
- Forza Motorsport developer Turn 10 is being merged with Forza Horizon and Fable developer Playground.
- Candy Crush developer King now includes Microsoft Casual Games, which runs Solitaire, Mahjong, and Minesweeper.
Studios in Trouble
Ninja Theory is closing down, and the signal has been given. Microsoft is talking with management about Arkane’s fate under French employment law, and that consultation is still underway and expected to continue through the end of the year, per Booty.
The future of the third Hellblade game, Senua, is in doubt, and Ninja Theory’s staff are among those concerned about what happens to the games and to their own jobs.
“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 added.
What Booty Said
Halo Studios will keep a small team supporting the Halo community and games in-market, according to Booty. He gave no timeline for the next Halo game, nor did he say whether Activision plans to start the series over.
The earlier round of cuts in July saw 1,600 staff lose their jobs; Microsoft said another 1,600 staff on top would also go this financial year.
Studios That Found New Homes
Psychonauts developer Double Fine and South of Midnight studio Compulsion navigated their way to independence as part of the Xbox reset. Booty confirmed Undead Labs has “successfully transitioned” on “similar terms” with a new publisher, releasing State of Decay 3 day one on Game Pass.
The trend is consolidation. Survivors among the small studios either went independent or found new homes, while the larger Xbox structure is being pared down.
The question now is whether Activision can produce the greatest Halo game ever. The company has deep talent, and this is a big ask for a franchise with a troubled recent run.
This paper takes a position in the story, and it is the one that backs small business and wants power to be spread around. Microsoft is the giant company moving its chess pieces, and the practical concern is what happens to the games and the staff.
Source material: “CONFIRMED: Microsoft Hands Halo to Call of Duty Developer Activision as Part of Huge Xbox Studios Shakeup,” IGN.
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