LIVE: Xbox’s Nuclear Reorganization — Activision Takes Over Halo as Massive Layoffs Shake Microsoft Gaming

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.