“`html

Microsoft is restructuring its Xbox gaming division once again, eliminating 268 additional positions and shifting the development of its flagship Halo franchise to Activision. Announced via an internal memo from Xbox Chief Content Officer Matt Booty, the sweeping organizational changes mark another phase in the division’s ongoing “reset” led by Xbox CEO Asha Sharma.

The 268 Layoffs and Progress on the Xbox Reset

The latest workforce reductions impact employees across Halo Studios, central management functions, and various first-party development teams. According to Booty, these cuts-combined with previous studio divestitures and layoffs executed earlier in the year-bring the division roughly three-quarters of the way through its comprehensive restructuring plan.

Microsoft CEO Satya Nadella has voiced strong support for the operational overhaul, which aims to reduce corporate overhead, streamline publishing pipelines, and refocus resources following a turbulent period of workforce reductions across the tech sector.

Halo Franchise Shifts to Activision

In one of the most significant strategic shifts, future development of the Halo franchise has been transferred to Activision. A newly created, dedicated team separate from Activision’s Call of Duty operations will helm the next mainline installment. Meanwhile, a smaller remnant team at Halo Studios will remain dedicated to community support and managing existing games in the market.

Alongside Halo, Activision’s publishing remit is expanding to encompass World’s Edge (overseer of Age of Empires) and Rare, placing several classic Microsoft properties under the same operational umbrella.

Major Studio Realignments and Consolidations

The reorganization introduces widespread structural changes across Microsoft’s entire portfolio of internal studios:

• Bethesda: Absorbs Obsidian Entertainment, which will continue working on current projects including Grounded and an upcoming Fallout project developed in collaboration with Bethesda Game Studios.
• King: Takes over Microsoft Casual Games, uniting two global forces in casual game design and live operations.
• Turn 10 and Playground Games: Formally merge into a single unified studio dedicated to the Forza and Fable franchises, building on a decade of close creative partnership.
• Undead Labs: Successfully completed a management transition with a new publisher, confirming that State of Decay 3 will launch day-one on Xbox Game Pass.

Uncertainty Surrounds Ninja Theory and Arkane Lyon

While several studios secured independent futures through management buyouts-such as Compulsion Games and Double Fine-prospects remain grim for others. Xbox confirmed that two separate acquisition agreements for Hellblade developer Ninja Theory ultimately fell through. Consequently, management has begun employee consultations regarding a proposed studio closure, though leadership stated they will continue exploring alternative paths forward.

Meanwhile, formal consultations regarding the future of Arkane Lyon under French labor laws remain ongoing and are expected to continue through the end of the year.

Looking Ahead to the Future of Xbox

As Asha Sharma’s leadership team works to reposition Xbox for long-term growth and profitability, the division faces a pivotal transition. Microsoft plans to bring its teams together for a comprehensive town hall on October 6 to reflect on ongoing progress, support affected personnel, and look ahead to what executives describe as one of the strongest upcoming software lineups in Xbox history.

“`