Xbox Cuts 268 Roles, Gives the Next Halo Game to Activision and Proposes Closing Ninja Theory

On 22 September 2026, Xbox chief content officer Matt Booty published a memo on Xbox Wire titled "Continuing Our Reset," announcing that the division is eliminating 268 roles across Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer. The same message reorganised Xbox's studios, moved the Halo franchise to Activision, and confirmed that Ninja Theory faces a proposed closure.

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Booty wrote that the actions completed since July, including the studio divestitures, "bring us roughly three-quarters of the way through previously announced restructuring." He said he was "deeply grateful for what our colleagues have built" and that he knew "how difficult today will be for those leaving and the teams around them."

The 268 figure covers Xbox Game Studios. The same morning, GeekWire reported that Microsoft's wider reductions that day numbered fewer than 600 globally, about 300 of them in Washington state, extending into cloud, AI, marketing and research. The Xbox cuts are the ones with names attached, because they land on the teams behind Halo, Forza, Age of Empires and Hellblade.

Fewer business units, bigger franchises

The memo's second section is a reorganisation. Booty wrote that the goal is "to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise." Four changes follow:

• Activision expands to include World's Edge, the Age of Empires studio, and Rare. It will also develop the next Halo title.
• Bethesda expands to include Obsidian, which continues its current projects, including Grounded, and the new Fallout project made with Bethesda Game Studios.
• King expands to include Microsoft Casual Games, bringing two casual-games operations under one roof.
• Playground and Turn 10 merge into a single studio covering the Forza and Fable franchises. The two have been partners for more than a decade.

Rare moving under Activision matters on its own. The British studio has been part of Xbox since 2002 and is best known today for Sea of Thieves, with a back catalogue that runs from Banjo-Kazooie to Viva Piñata. World's Edge has run Age of Empires since 2019 and exists to manage that franchise, including Age of Empires IV and the remasters of the earlier games. Grouping it with Rare and Halo under Activision gives that publisher three long-running series to run alongside Call of Duty.

Xbox has not said whether further rounds are planned, only that the July programme is roughly three-quarters complete.

Halo changes hands

The most consequential change is Halo. According to the memo, the next Halo title will be "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty." A small team at Halo Studios will continue supporting the Halo community and the games already on the market.

Halo Studios is the developer formerly known as 343 Industries, created by Microsoft to steward the series after original studio Bungie left. The reorganisation means the studio built around Halo will no longer lead it, while the publisher Microsoft acquired with Activision Blizzard in 2023 takes charge of the next chapter.

"For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy, while staying true to what made players love it in the first place." — Rob Kostich, Activision president

Kostich's statement, given to Kotaku and carried by Variety, also welcomed Rare and World's Edge to Activision. The memo gives no timeline for the next Halo and does not say how large the new team is. IGN reported that the majority of the 268 cuts landed at Halo Studios.

Ninja Theory and the divestitures

The third section updates the studio divestitures that began in July. In August, Compulsion and Double Fine returned to management with their IP, back catalogues and runway funding. Undead Labs has now transitioned on similar terms and, with a new publisher, will release State of Decay 3 on Game Pass at launch. That transition was not painless: Undead Labs confirmed it is now employee-owned and announced a "significant" number of layoffs, as reported by Game Developer.

Ninja Theory is the harder case. Booty wrote that "two separate agreements for Ninja Theory fell through," and that Xbox will now "begin consultation with employees on a proposed closure while continuing to explore other paths forward." Ninja Theory, founded in 2000 and acquired by Microsoft in 2018, built the Hellblade games around mental-health themes and a deliberately small production model. It was one of the five studios Xbox put up for divestiture in July.

Consultation with Arkane, the Lyon studio behind Dishonored and Deathloop, "remains underway and is expected to continue through the end of the year," Booty wrote. Under French labour law, a consultation period can precede a sale, a spin-out or a closure, which is why the process takes months rather than days.

Why this is happening

The memo is the second stage of a reset Xbox set out in July 2026. Under chief executive Asha Sharma, who took over the division earlier in the year, Xbox said it would cut about 3,200 roles, roughly 20% of the division, over fiscal 2027, starting with about 1,600 in July, and divest five studios. GamesIndustry.biz reported the plan when it was announced.

The financial backdrop was described before the cuts. In a June 2026 memo, Sharma and Booty wrote that the division had spent more than 20 billion dollars on content, platform and hardware subsidy over five years while annual revenue fell by nearly half a billion dollars, and that Xbox was "in a hardware component crisis," with component costs for the 2027 holiday season expected to be more than five times what the company paid two years earlier. The Verge published those figures.

Some of that pressure is industry-wide. A global shortage of memory chips, driven by demand from AI data centres, has raised the cost of the DRAM and storage that consoles and gaming PCs depend on, as Omdia analysts noted in Game Developer. Layoffs are not confined to Xbox either. Analyst Matthew Ball's tracking, cited by GamesIndustry.biz, put industry-wide layoffs for 2026 at a revised forecast of roughly 14,666, close to the 2024 record of about 15,631.

Subscription economics add to the squeeze. Game Pass remains central to Xbox's strategy, and the division has been under pressure to make that model work as the cost of stocking it with day-one releases rises. Consolidating franchises under fewer units is one way to control how much new content the division has to fund at once.

What the reorganisation means

Strip away the studio names and the reorganisation does one thing: it concentrates franchises into fewer, larger units and hands the biggest of them to publishers with live-service experience. Halo goes to the Call of Duty publisher. Obsidian goes to Bethesda. Microsoft Casual Games goes to King. Playground and Turn 10, which had already shared technology for years, become one team.

Putting Halo under the Call of Duty publisher is the most symbolically loaded piece. Halo arrived with the original Xbox in 2001 and spent two decades as the platform's defining exclusive, while Call of Duty is the annual blockbuster Microsoft bought in 2023 and has kept multiplatform. The new arrangement places a series built on story campaigns and arena multiplayer inside the publisher known for yearly, live-service shooters.

For players, the practical effects will take time to surface. Halo's next game is not dated. Ninja Theory's projects are in limbo. Rare and World's Edge now report into a different organisation, though their current games keep running. The clearest near-term signal is the all-Xbox town hall Booty scheduled for 6 October, where the division is expected to look ahead to its release slate.

Two questions will shape what happens next. The first is whether Ninja Theory finds a buyer before consultation ends, which would turn a proposed closure back into a divestiture. The second is whether putting Halo under Activision changes how the series is made, or only who signs off on it. The memo describes a structure. The games will show what it means.

Cover: an original Xbox console and controller. Image by Evan-Amos, via Wikimedia Commons, public domain.