Microsoft’s Xbox division is set to cut 268 jobs as part of its ongoing restructuring, affecting employees across Halo Studios, other first-party teams, and Xbox Game Studios’ management and central functions. The latest reductions are part of a broader plan announced earlier this year to reorganize the gaming business around fewer units and consolidate publishing operations.
Xbox chief content officer Matt Booty said the changes completed since July, including studio divestitures, have taken the company roughly three-quarters of the way through the previously announced restructuring.
One of the biggest changes involves the Halo franchise. Activision will take responsibility for developing the next mainline Halo game through a newly formed team that will operate separately from its Call of Duty development groups.
Halo Studios will not disappear. Xbox said a smaller team will remain in place to support the Halo community and existing games on the market. Activision is also expanding its remit to include Rare, the studio behind Sea of Thieves, and World’s Edge, which oversees the Age of Empires franchise.
The shift marks a major change in how Xbox is organizing some of its established franchises, moving development and publishing responsibilities between units.
The restructuring extends beyond Halo. Bethesda will take responsibility for Obsidian Entertainment, while King will add Microsoft Casual Games to its operations.
Playground Games and Turn 10 Studios will also combine into one studio focused on the Forza and Fable franchises. The two teams have worked as creative and technology partners for years, according to Xbox.
Microsoft has also provided updates on previously announced studio divestitures. Compulsion Games and Double Fine have returned to independent ownership, while Undead Labs has also transitioned out of Xbox. Its next game, State of Decay 3, is expected to launch day one on Game Pass under its new publisher.
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Ninja Theory is facing a more uncertain future after two separate agreements to sell the studio fell through. Xbox said it will begin consultation with employees regarding a proposed closure while continuing to explore other options. Consultations over the future of Arkane are also continuing and are expected to run through the end of the year.
The latest 268 job cuts follow the 1,600 Xbox layoffs announced in July. Microsoft had previously said its restructuring would affect 3,200 roles during its 2027 financial year. Xbox is expected to provide further updates during an October 6 company-wide town hall.