Activision to develop the next Halo game in Xbox studio shake-up

Microsoft is restructuring its Xbox studios, with Activision taking responsibility for the next flagship Halo game and expanding its remit to World’s Edge and Rare.

According to an internal memo cited by The Verge, Microsoft is eliminating 268 roles across Halo Studios, other first-party studios, and Xbox management and central functions. This follows 1,600 earlier Xbox layoffs. A new, purpose-built Activision team will develop the next Halo title separately from Call of Duty development. Halo Studios will continue supporting existing games, including Halo Infinite and Halo: Campaign Evolved.

The changes also move Obsidian under Bethesda, where it will work on a new Fallout project with Bethesda Game Studios. Playground Games and Turn 10 Studios will merge into one team focused on Forza and Fable. Microsoft Casual Games will move from Bethesda to King.

Microsoft said 3,200 roles are expected to be affected during its 2027 financial year, which ends in June 2027. The latest cuts bring the total to nearly 1,900, with more than 1,000 roles still unannounced. Microsoft said it is roughly three-quarters through the previously announced restructuring. A proposed Ninja Theory closure is also entering employee consultation.