Xbox Reset Cuts 268 Jobs as Halo Moves to Activision

Xbox is cutting 268 jobs, with the reductions landing at Halo Studios, at other first-party development teams, and at the central management and support functions inside Xbox Game Studios. The cuts are the second phase of an Xbox reset that is redrawing which parts of the business own the division's largest franchises.

The change with the widest reach is Halo. Development of the next mainline game moves to Activision, the Call of Duty publisher Microsoft bought in 2023 for $68.7 billion. Activision will staff a dedicated team for the project, held apart from Call of Duty. Halo Studios, the team formerly known as 343 Industries, drops to supporting the Halo games already on sale and the players using them.

The details come from a memo published on Xbox Wire on 22 September 2026 under the title Continuing Our Reset and signed by Matt Booty, Xbox's executive vice president and chief content officer. Booty's note puts the division about three-quarters of the way through a restructuring first announced in July 2026.

One publisher, three franchises

Activision's remit now stretches well past Call of Duty. Rare, which makes Sea of Thieves, and World's Edge, which runs Age of Empires, both report into Activision. That places three long-running properties plus Call of Duty inside a single business unit. Obsidian Entertainment moves under Bethesda, which takes on a wider brief. Playground Games and Turn 10 combine into one studio built around Forza and Fable. King, the mobile publisher, absorbs Microsoft Casual Games, the group behind Windows Solitaire.

Concentration is the point of the exercise. Xbox is replacing a set of independent studios with a smaller number of franchise houses, each carrying several properties. Two publishers, Activision and Bethesda, plus King now cover most of the first-party slate that once sat directly inside Xbox Game Studios.

Ninja Theory is the outlier. The Cambridge studio, known for Hellblade, is in consultation over a proposed closure after divestiture talks failed, meaning a sale that would have preserved the team did not close. Elsewhere, State of Decay 3 keeps its day-one Game Pass release under a new publisher, and Xbox has scheduled a staff town hall for 6 October 2026.

How this round compares with July

September's total is much smaller than July's. The earlier wave removed 1,600 roles at once. The current figure is roughly a sixth of that. Xbox chief executive Asha Sharma has described the July plan as the start of the division's most significant restructuring, targeting about 3,200 role removals through fiscal year 2027, close to a fifth of the unit's headcount.

Two rounds together suggest the reset has passed its deepest point. A programme three-quarters complete leaves roughly 800 roles still to cut. The memo points those remaining reductions at studios and central functions, the same targets as this round, rather than at the publishing or platform groups.

The commercial logic behind it is easy to follow. Game Pass needs a steady flow of releases, and a franchise with an installed audience is cheaper to greenlight than a new property without one. Halo, Call of Duty, Forza, Sea of Thieves, Age of Empires and Candy Crush, which King runs, each arrive with a ready base. Folding them into fewer units cuts the number of business units Xbox has to manage.

The trade-offs

The cost lands on the games. A Halo title built inside the Call of Duty organisation inherits that organisation's production habits, from shared engine and tooling work to the live-service release rhythm suited to an annual shooter. A publisher whose business rests on Call of Duty now sets creative direction for a franchise whose last mainline entry ran on a much slower clock.

Concentration also narrows the routes a project takes to approval. With Obsidian reporting to Bethesda and Rare reporting to Activision, a pitch outside those publishers' established genres has fewer internal sponsors than it did when the studios reported straight into Xbox Game Studios. That effect will not show up on a release calendar for years, which makes it hard to weigh against the savings booked now.

Support commitments are the variable subscribers will notice first. Halo Studios stays on the games already being played, but its brief is maintenance and community work, not the franchise's next chapter. If that team keeps shrinking, live-service updates for current Halo titles become the earliest place the restructuring reaches players, well before any new instalment ships.

What to watch

For players, little changes today. Existing Halo titles keep their support, State of Decay 3 still arrives on Game Pass at launch, and Xbox has cancelled nothing on the slate outright. Xbox has attached no dates to how the reorganisation affects the wider schedule, and the next Halo carries no announced release window or platform list.

The open question is cadence. A franchise house model could ship Halo games faster than the studio structure it replaces, or it could produce fewer distinct games across the portfolio while keeping the biggest names on schedule. The answer will not be visible until Activision's Halo team shows its first release, and until the roughly 800 remaining role cuts are allocated.

Why this matters

Xbox is trading studio variety for reliability, betting that established franchises can keep a subscription service fed every month. That bet is now measured against a shrinking headcount: a target of about 3,200 role removals, 268 of them announced this week, and a first-party slate that will be judged on whether Halo, Forza and Bethesda's properties ship on time. Players who stay subscribed are effectively wagering that consolidation buys speed rather than only savings.

Photo by Nicholas Santoianni on Unsplash

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Researched and cross-referenced against primary sources by the Bytevyte editorial team. This article was generated with the assistance of artificial intelligence and reviewed by the Bytevyte editorial team.