Xbox restructures with layoffs, Halo shifts to Activision, Ninja Theory at risk
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Key developments
According to Wccftech, Halo Studios did not have a new Halo game in full production before the recent layoffs. Instead, the studio had four projects in simultaneous early planning stages: remakes of Halo 2 and Halo 3, Halo 7, and a spin-off campaign based on the novel "First Strike." The spin-off was designed as a smaller, quicker release targeting next year with roughly five campaign missions and a Firefight mode to bridge the gap between the Halo: Campaign Evolved release and the Halo 2 remake. A small core team had also pitched a concept for Halo 7 to Xbox executives including Matt Booty, promising campaign, PvP, PvE, and Forge at launch, though the project was reportedly years from release.
According to Wccftech, Halo insider RebsGaming reports that before the recent layoffs, Halo Studios had no new game in full production but was simultaneously planning four projects. These included remakes of Halo 2 and Halo 3, Halo 7, and a spin-off campaign adapting Eric Nylund's novel First Strike. The spin-off was designed as a smaller, quicker release targeting next year with roughly five campaign missions and a Firefight mode to bridge the gap between the Halo: Campaign Evolved remake and the Halo 2 remake. Separately, a small team reportedly pitched Halo 7 to Matt Booty and executives earlier this month, promising campaign, PvP, PvE, and Forge at launch, though the project remained years away.
According to Notebookcheck, Halo Studios veteran Josh Daniels was promoted to cinematic director and terminated in the same week as part of the 268 layoffs announced in Microsoft's "Continuing Our Reset" memo. Daniels confirmed the sequence on LinkedIn, writing he was "promoted and laid off in the same week" and seeking new cinematic direction or production roles. The cuts eliminated roles across Halo Studios and its management layer, though a small team remains for community and legacy game support. Activision president Rob Kostich told GameFile the publisher aims to "make the greatest Halo game ever" with a newly assembled purpose-built team separate from Call of Duty development, but no codename, roster, release window, or gameplay details have been announced.
According to TwistedVoxel, Ninja Theory had two interested buyers as part of Xbox's divestment plans, but both deals fell through. Christopher Dring reported on The Game Business Show that investors found the studio's high team costs prohibitive. Employees are now in consultation, giving Xbox roughly six weeks to find another buyer before potential closure under UK law. Dring noted a contact at Xbox Game Studios said the current project Senua is "shaping up very well" and represents "a significant improvement" over Hellblade II.
According to TwistedVoxel, Xbox is internally concerned about a significant imbalance in GTA VI pre-orders favoring PlayStation 5 over Xbox Series X|S. The Verge's Tom Warren reports sources describe the skew as "heavily skewed toward PS5," viewing it as another alarm bell for Microsoft's hardware strategy amid three consecutive years of declining Xbox hardware revenue and rising memory costs pressuring console pricing. GTA VI launches November 19, 2026.
According to GNN | Latest News, Microsoft is restructuring Xbox studios, moving the Halo, Sea of Thives, and Age of Empires franchises under Activision control. Halo Studios will support existing titles like Halo Infinite and Halo: Campaign Evolved, but a new purpose-built Activision team separate from Call of Duty will develop the next flagship Halo game. World's Edge and Rare's UK team are also joining Activision. Microsoft is laying off around 268 Xbox employees and likely closing Ninja Theory. Obsidian is moving to Bethesda to partner on a new Fallout title.
According to ixbt.games, an anonymous id Software employee told Aftermath that internal communications remain "entirely corporate nonsense" despite management attempts at transparency. The employee says teams face aggressive financial targets that would have been difficult even before layoffs, and morale continues to decline with each new decision. Insider Gaming sources previously reported staff "tread carefully" because tenure and completed projects do not guarantee job security.
According to The Verge, some Halo Studios employees waited hours to learn their status after Microsoft announced cuts via a public Xbox blog before sending individual notifications. Former cinematic director Josh Daniels said he was "promoted and laid off in the same week." Former World's Edge head Shannon Loftis criticized Xbox chief Asha Sharma on Threads, contrasting Sharma's "clarity is kindness" comment with the "half layoff" execution. One ex-employee, Ron B, described the layoff as "mostly relief" after being "miserable for the last year and a half."
According to Lords of Gaming, the restructuring places Halo Studios, Rare, and World's Edge under Activision, while Obsidian moves under Bethesda and Microsoft Casual Games shifts to King. The author notes Blizzard is not a destination for these transfers. Activision president Rob Kostich told The Game Business that work has begun assembling a new team for the next Halo, separate from Call of Duty development. The author expresses willingness to give the new team a chance but emphasizes retaining Halo Infinite's movement and gunplay mechanics.
According to IGN, Xbox CEO Asha Sharma assigned Activision the next Halo title because the publisher operates as an "unrelenting video game factory" capable of delivering high-budget shooters annually. The opinion piece argues Halo Studios failed to replicate Bungie's consistent output, noting a six-year gap between Halo 5 and Infinite with another six-year gap looming. IGN states Halo has not produced a "must-play" entry or 90+ Metacritic score since Bungie's departure, suggesting the franchise struggles to honor its legacy formula while innovating.
According to Eurogamer.net, Hellblade subreddit users express devastation over Ninja Theory's impending closure, noting the studio appeared on stage at the Xbox reveal for Senua's Saga just three months ago. Some speculate Xbox showcased the game to make the studio more appealing to potential buyers. Community members describe Ninja Theory as one of the few arthouse developers in the triple-A space, fearing a shift toward titles with calculated sales potential. One redditor shared a personal story of the studio connecting them with an Oxford professor for accurate Elder Futhark runes for a Hellblade tattoo, and Senua actor Melina Juergens engaging with their post.
According to Wccftech, NYU Stern professor Joost van Dreunen describes Microsoft's reorganization as a reverse acquisition in slow motion. In his SuperJoost Playlist newsletter, van Dreunen argues the publishers Microsoft paid $76.5 billion for — Activision Blizzard and ZeniMax — are now the divisions best equipped to run the studios and IP Microsoft built itself. The new structure places Activision in charge of World's Edge, Rare, and the next flagship Halo, while Bethesda absorbs Obsidian and King takes over Microsoft Casual Games. Van Dreunen calls handing Halo to Activision surprising at best and evidence of how poorly Xbox ran its studios at worst. He notes Xbox relies on first-party titles for 61% of its content revenue, more than double Sony's 29%, while pure-play publishers like EA and Take-Two have shipped more reliably without a platform to support.
According to mxdwn Games, Microsoft is restructuring Xbox with the next Halo title moving to a new Activision-led development team separate from Call of Duty, while Rare and World's Edge shift under Activision's expanded remit. A small Halo Studios team will remain to support existing games and community. The changes, outlined by Xbox chief content officer Matt Booty on September 22, include 268 position eliminations across Halo Studios, other first-party studios, Xbox Game Studios management, and central functions. Microsoft says actions since July, including studio divestitures, put it roughly three-quarters through the previously announced 3,200 role reductions for fiscal 2027. Two agreements to sell Ninja Theory fell through; Microsoft will now consult employees over a proposed closure while exploring other paths. World's Edge has reportedly lost just under half its staff, including creative director Adam Isgreen, and Undead Labs has become an independent, employee-owned studio with State of Decay 3 still in development.
According to IGN, World's Edge staff report nearly 50% of the studio was laid off and its next project cancelled following reorganization under Activision. Former creative director Adam Isgreen confirmed the cuts after 16 years at the studio, while former senior software engineer Andrew Martz stated the reorganization led to the project cancellation and large-scale layoffs. Former lead principal software engineer Greg Snook noted his termination coincided with his 25-year hire anniversary. The cuts form part of 268 staff reductions across Xbox, within a projected 3,200 job losses this financial year. The Viking Sagas DLC for Age of Empires II: Definitive Edition launched Tuesday with three new civilizations and 15 campaign scenarios.
According to Kotaku, a new Age of Empires game has been shelved following the gutting of World's Edge studio. Former Studio Creative Director Adam Isgreen posted on LinkedIn that the team had "some great plans for what's next" before the layoffs, while former employee Andrew Martz confirmed "our next project was cancelled." World's Edge, which oversaw the Age of Empires franchise across multiple studios, lost at least half its staff and has been moved under Activision's domain. Key figures including Isgreen, who worked on RTS titles since 1993, are gone. Kotaku reports that World's Edge executive producer Earnest Yuen had previously hinted at interest in building a new Age of Empires entry beyond remasters.
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According to The Gamer, Bethesda president Jill Braff states Obsidian Entertainment will retain its creative identity and leadership under the new reporting structure. In an internal email shared by Aftermath, Braff confirms CEO Feargus Urquhart and the Obsidian leadership team will continue to lead the studio, which will report to her. Bethesda Game Studios will continue leading the Fallout franchise while both teams collaborate on a new Fallout project. Braff says the structure supports the franchise-led model while keeping accountability clear for both studio and franchise.
According to games.gg, Juan Vaca, story director on Gears of War: E-Day at The Coalition, announced on LinkedIn he was laid off in yesterday's Xbox cuts. Vaca had celebrated the game going gold five days prior; it releases October 6. Kotaku reports fewer than a handful of developers at The Coalition were affected, citing an anonymous source who said the cuts were unrelated to the broader Xbox restructuring.
According to SuaraGarut.ID, data in the September 23 Xbox PC app update reveals a new Mythic Achievements system awarding a special badge and 15-second audio sequence for 100% completion and maxed Gamerscore on a title. Xbox CEO Asha Sharma previously confirmed a Platinum-style milestone would arrive before year-end. The discovery coincides with the elimination of 268 roles across Halo Studios, first-party studios, and XGS management, as detailed by Matt Booty. Under the restructuring, Activision takes over Halo development while a reduced Halo Studios team maintains community support and oversight for World's Edge and Rare. Bethesda and Obsidian are grouped together, Playground and Turn 10 merge for Forza and Fable, and Microsoft Casual Games shifts under King. Undead Labs transitions to independent status with State of Decay 3 planned for Game Pass. Microsoft also proposes closing Ninja Theory, while Arkane's future remains under discussion. Hardware insider KeplerL2 claims Project Helix targets a 56-teraflop chip for late 2027.
Epic Games CEO Tim Sweeney defended Microsoft's Xbox restructuring, arguing that placing strong-performing studios in charge of major projects gives those games the best chance of success, according to PC Guide. His comments follow Microsoft's confirmation of 268 layoffs across Halo Studios and Xbox Game Studios central functions, alongside a significant operational shift handing the next Halo game to a new Activision team. Sweeney's support appears focused on the consolidation strategy rather than the job losses themselves, noting Activision's extensive experience managing large-scale development through Call of Duty. The restructuring also expands Activision's oversight to Rare and World's Edge, while Bethesda assumes leadership of Obsidian and King takes over Microsoft Casual Games.
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According to TechPowerUp, Halo Studios now retains fewer than 20 employees after the latest layoffs, per insider claims cited by influencer LaSinity. Age of Empires developer World's Edge has been placed under Activision oversight, with ResetEra user Tempus Chaoti reporting just under half the studio was let go. Former Creative Director Adam Isgreen confirmed the layoffs on LinkedIn, while Senior Software Engineer Andrew Martz stated the restructuring cancelled the studio's next project. Developers working on reviving Halo Digsite — a project to release cut Halo content for modders — were also laid off after over a year of work, with one posting on X that the effort is now done.
According to Rock Paper Shotgun, Obsidian will remain a "distinct" studio with its own creative identity despite reporting to Bethesda president Jill Braff. In a memo published by IGN, Braff states the reorganization is primarily a reporting structure change and that CEO Feargus Urquhart and Obsidian leadership will continue to lead the studio. Bethesda Game Studios will continue leading the Fallout franchise, while both teams build on early work on a new Fallout project directed by Josh Sawyer. Braff adds the company is not resetting its roadmap or asking teams to change focus.
According to GamesIndustry.biz, Microsoft has patented an "ad-credit" system designed to display advertisements during natural pauses in PC and Xbox game sessions, such as loading screens or the end of missions. Gameplay and controls would be temporarily suspended during the ad to prevent progress loss, after which players receive a credit granting 15 minutes to over an hour of ad-free play. The patent defines uninterrupted playtime by progression events like completing levels or multiplayer matches. This follows Xbox Insider testing of ad-supported cloud streaming sessions and the upcoming November 2026 monthly cloud gaming limits for Game Pass tiers, which Microsoft attributes to rising infrastructure costs.
Microsoft is restructuring its gaming division, resulting in 268 layoffs at Halo Studios and Xbox Game Studios. This coverage tracks the operational shift handing Halo to Activision and the potential closure of Ninja Theory.
