Microsoft has confirmed that the next mainline Halo game will be developed by Call of Duty maker Activision, alongside a sweeping corporate restructure that cuts 268 jobs across Halo Studios, first-party developers, and central management. Announced on September 22, the ongoing reset under Xbox leadership brings the tech giant roughly three-quarters of the way through its planned downsizing.
The Structural Overhaul at Xbox Studios
The latest round of cuts eliminates 268 roles spanning Halo Studios, other first-party developers, and Xbox Game Studios management and central functions. According to Xbox Chief Content Officer Matt Booty, these actions leave Microsoft roughly three-quarters of the way through the restructuring process initiated earlier this year. The reductions follow a summer period in which 1,600 staff lost their jobs, with Microsoft indicating that another 1,600 staff on top would also go this financial year.
The reorganization heavily impacts the architecture of Microsoft’s internal development teams. Obsidian Entertainment is moving under Bethesda, where both studios will collaborate on a new Fallout title while Obsidian continues existing projects like Grounded. Meanwhile, Rare and Age of Empires developer World’s Edge are shifting under Activision. Forza Motorsport developer Turn 10 is combining with Forza Horizon and Fable studio Playground Games into a single unit.
Undead Labs has successfully left Xbox to become an independent entity, retaining its intellectual property and back catalog. Its upcoming State of Decay 3 will be released by another publisher but remains scheduled to launch on Game Pass on day one. Conversely, the future of Hellblade developer Ninja Theory remains uncertain. Xbox noted that two attempts to divest the studio have fallen through, and consultation has begun over its proposed closure while alternative paths are explored. Arkane Lyon remains in a similar consultation period expected to last through the end of 2026.
Activision Takes the Reins of Halo
With Halo Studios significantly reduced in headcount, Microsoft has handed its flagship sci-fi franchise over to Activision. A small team at Halo Studios will remain to support the community and games currently in the market, but the next mainline installment will be built by Activision. Booty stated that the new Halo title will be led by a “purpose-built team that is separate from ongoing development and plans for Call of Duty.”
Rob Kostich, president of Activision, outlined the publisher’s ambitions for the acquisition. “We’re thrilled to welcome Halo, Rare, and World’s Edge to Activision,” Kostich said. “It’s an honor and a responsibility that we do not take lightly. These teams and their games have inspired fans around the world for decades.” Kostich added that the primary goal is to create the greatest Halo game ever while staying true to the series’ roots, noting that a unique, purpose-built team has already been assembled.
The franchise handover arrives after a challenging era for the series under Microsoft’s direct stewardship. Microsoft originally acquired Halo when it bought Bungie in 2000, before Bungie split to become independent in 2007. Microsoft subsequently established 343 Industries to helm the property, releasing Halo 4 in 2012, Halo 5: Guardians in 2015, and the heavily delayed Halo Infinite in 2021. In 2024, 343 Industries rebranded as Halo Studios and showcased experimental work built on Epic’s Unreal Engine via Project Foundry. It remains unconfirmed whether Activision plans to carry that underlying engine work forward into its own development cycle.
