Xbox Layoffs: 268 Employees Cut; Activision Takes Over Next ‘Halo’ Game

Xbox Announces Layoffs of 268 Employees

Xbox has laid off 268 employees as part of a previously disclosed job elimination initiative, according to a memo from Xbox Chief Content Officer Matt Booty, reported by Variety. This significant reduction primarily affects Halo Studios, other first-party studios, and the management layer within Xbox Game Studios (XGS). Booty emphasized that this restructuring reflects ongoing efforts to streamline operations and focus on core franchises amidst a broader workforce reduction plan announced earlier this year.

Activision to Develop the Next ‘Halo’ Game

In a notable shift within Microsoft’s gaming strategy, Activision will take the lead in developing the next installment of the iconic ‘Halo’ franchise. This move comes during a time when Xbox is restructuring its studios to enhance collaboration and efficiency. Booty stated that a specially assembled team will manage the new ‘Halo’ title, while some staff at Halo Studios will remain to support the existing community and ongoing game operations.

Context of Xbox's Workforce Reduction

The layoffs this week follow a larger plan initiated earlier in 2026. New Xbox CEO Asha Sharma indicated in July that the company would cut its workforce by up to 3,200 employees, approximately 20% of its total staffing levels. The restructuring aims to improve overall organizational agility by combining studios and redefining roles. Booty highlighted these recent layoffs as part of a more extensive plan that will bring the company roughly three-quarters of the way through the restructuring process.

As Microsoft navigates these changes, the implications for franchises like ‘Halo’ and others remain significant. Activision’s involvement in developing a new ‘Halo’ title has led to mixed feelings among fans, given the franchise's storied history within the gaming community.

Xbox Layoffs: Studio Reorganization and Future Collaborations

In addition to Activision taking charge of the next ‘Halo’ game, there will be several studio reorganizations as part of this initiative. Bethesda will expand to include Obsidian, allowing the studio to continue work on ongoing projects, while Playground Games and Turn 10 will merge efforts focused on the ‘Forza’ and ‘Fable’ franchises. Following the layoffs, Booty also mentioned that consultation with affected studios, including Ninja Theory, is ongoing, with a proposed closure under consideration.

Xbox Layoffs: Impact on Major Franchises

The restructuring and layoffs underscore a critical period for Xbox as it seeks to enhance its game lineup amidst significant staff reductions. Activision President Rob Kostich emphasized the weight of taking responsibility for the ‘Halo’ franchise while planning to honor its legacy and achieve ambitious goals for the next release. The broader group restructuring highlights Microsoft’s intent to create stronger synergies and operational efficiency among its various studios during a tumultuous time for the gaming industry.

What Happens Next

As the retrenchment unfolds and the new structure takes root, Xbox will continue to focus on how best to support both its remaining employees and the audiences that engage with its franchises. The consolidation and shifts will likely lead to a stronger emphasis on the quality and depth of its gaming offerings, as the company responds to new challenges in the evolving gaming landscape. Extra diligence around community engagement and franchise fidelity will be crucial for Xbox as it aims to retain player trust and enthusiasm throughout these transitions.

For more information related to these developments, stay updated through our ongoing coverage. You can also read about other recent changes in the gaming sector, such as Sega PS2 exclusive game officially returning next year and Metal Gear Solid successor Physint moving to Xbox.