- Microsoft’s (NASDAQ:MSFT) Xbox division is cutting 268 more jobs as part of an ongoing restructuring effort that is now roughly 75% complete
- Activision will oversee Halo, Rare, and Age of Empires, with a new Activision-led team developing the next Halo game
- Xbox is consolidating studios, expanding Bethesda’s oversight of Obsidian, spinning off several teams, and exploring the closure of Ninja Theory while Arkane’s future remains under review
- Microsoft stock (NASDAQ:MSFT) last traded at US$499.09
Microsoft’s (NASDAQ:MSFT) Xbox division is pressing ahead with what executives call a company-wide “reset,” announcing another round of layoffs alongside one of the most significant organizational restructurings in the brand’s history.
In aletter sent to employees, Xbox chief content officer Matt Booty confirmed that 268 positions are being eliminated across Halo Studios, various first-party development teams, and Xbox’s management and central operations groups. The reductions bring Xbox approximately three-quarters of the way through a broader restructuring plan first outlined earlier this year.
“These actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring,” Booty wrote. “I am deeply grateful for what our colleagues have built.”
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Activision takes control of Halo, Rare, and Age of Empires
The headline-grabbing change is Xbox’s decision to place several major franchises and studios under Activision’s oversight.
Under the new structure:
- Activision will oversee World’s Edge, the studio responsible for the Age of Empires franchise.
- Rare, the legendary developer behind Sea of Thieves, will also move under Activision’s management.
- Most notably, Activision will develop the next Halo game.
According to Booty’s memo, the upcoming Halo title is being developed by a new, dedicated team within Activision that is separate from Call of Duty development. Meanwhile, Halo Studios, formerly 343 Industries, will transition into a smaller support role focused on maintaining existing Halo games and supporting the community.
Activision President Rob Kostich welcomed the changes in a statement, saying the company aims to create “the greatest Halo game ever” while remaining faithful to the franchise’s legacy.
The move represents a major shift for one of Xbox’s most iconic properties. Halo has struggled to regain its former prominence following the mixed reception to recent entries, particularly Halo Infinite’s post-launch support challenges. Handing development responsibilities to a fresh team suggests Microsoft believes the franchise needs a new direction.
Bethesda gains oversight of Obsidian
Another major restructuring involves Bethesda.
Booty confirmed that Bethesda will expand its oversight to include Obsidian Entertainment, though Obsidian will continue work on its existing projects. These include:
- Grounded
- A new Fallout project being developed in collaboration with Bethesda Game Studios
The arrangement reunites two studios that share deep roots in RPG development. Obsidian’s previous work on Fallout: New Vegas has long fueled fan interest in a closer partnership between the companies.
Another Turn on the Playground
Xbox is also consolidating its racing operations.
Playground Games and Turn 10 Studios will officially merge into a single studio focused on the Forza and Fable franchises.
The two teams have collaborated for years, particularly on the Forza series. The merger formalizes a relationship that many industry observers felt was already operating as a unified effort following previous layoffs and downsizing at Turn 10.
According to Xbox, the goal is to streamline technology, talent, and creative leadership under a single structure.
King expands into casual gaming
Mobile gaming giant King, best known for Candy Crush, will take responsibility for Microsoft’s casual gaming portfolio, including titles such as Solitaire.
Xbox says the move will unite two major casual gaming businesses under one leadership structure and strengthen live-service operations.
Studio divestitures continue
Booty also provided an update on previously announced studio divestitures.
According to the memo:
- Compulsion Games has returned to independent ownership.
- Double Fine Productions has also regained independence, taking its intellectual property and back catalogue with it.
- Undead Labs has similarly transitioned away from Xbox ownership and secured a new publishing arrangement while maintaining plans to launch State of Decay 3 on Game Pass.
However, not every studio found a successful path forward.
Ninja vanish!
The most concerning development involves Ninja Theory, the creator of the Hellblade franchise.
Booty revealed that two separate attempts to secure a deal for the studio have fallen through.
“We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward,” he wrote.
The announcement casts significant uncertainty over the future of projects currently in development at the studio. While Xbox says discussions are ongoing, the possibility of closure represents one of the most dramatic consequences of the ongoing reset.
Meanwhile, consultation regarding Arkane remains underway and is expected to continue through the end of the year.
What does this mean for Xbox?
The latest changes underline how dramatically Xbox is evolving following years of aggressive acquisitions and escalating development costs.
Microsoft’s purchase of Activision Blizzard King transformed Xbox into one of gaming’s largest publishers, but it also created an enormous organization with overlapping studios, management structures, and development pipelines. The current restructuring appears designed to simplify those operations, reduce costs, and place major franchises under centralized leadership.
For players, the most immediate questions center on Halo’s future, the fate of Ninja Theory and Arkane, and whether the new Activision-led approach can revitalize franchises that have struggled to meet expectations.
For employees, however, the latest announcement marks another bummer of a chapter in an industry that has experienced repeated layoffs and restructuring over the last several years.
Xbox leadership maintains that the changes will create a stronger foundation for future growth. Yet with roughly 25% of the previously announced restructuring still to be completed, uncertainty continues to hang over one of gaming’s biggest brands.
Remember “the red ring of death”?
Microsoft Corp. develops and supports software, services, devices, and solutions. The company’s segments include productivity and business processes, intelligent cloud, and more personal computing.
Microsoft stock (NASDAQ:MSFT) closed trading 0.50% lower at US$499.09 but has managed to start turning things around to the point where it is up almost 3% since this time last year.
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