Xbox has announced its next round of layoffs and studio restructuring as part of its ongoing business reset. The cuts, which come just over two months after the company laid off 1,600 employees and divested four of its game studios, will have a significant impact on Halo Studios, which is also losing its stewardship of the Halo franchise. The next Halo game, Xbox said in its announcement, will instead be developed by Call of Duty maker Activision.
A total of 268 workers will be laid off across Halo Studios and other first-party studios, Xbox Game Studios management and central functions layer, Xbox’s chief content officer Matt Booty said in an announcement on Tuesday. “The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring,” the Xbox CCO confirmed.
As part of the new cuts, Microsoft is also closing Senua developer Ninja Theory. The studio was amongst the developers that were confirmed to be in talks with Xbox to divest and find new ownership. However, talks to find a solution for Ninja Theory fell through, Booty confirmed.
Xbox Confirms Major Studio Restructuring
Xbox’s latest studio restructuring will see major changes to first-party developers like Halo Studios, Bethesda, Obsidian, Playground Games and Turn 10 Studios, among others.
The biggest change hits Halo Studios, formerly 343 Industries. Despite having the name of the franchise in its title, the studio is losing the reins of the Halo franchise. Booty confirmed that Activision will take over development on the next Halo title. Work on the project will be led by a new, “purpose-built” team separate from Call of Duty teams at Activision, Booty added. Microsoft has not yet shared details about the next Halo project.
It’s unclear how many employees are left at Halo Studios. Booty said “a small team” at the studio will continue supporting the Halo community and games in-market. Among the laid off workers at the developer was cinematic director Josh Daniels, who confirmed in a LinkedIn post that he was promoted and then laid off in the same week.
Additionally, Activision is also expanding its remit to Age of Empires developer World’s Edge and Seat of Thieves maker Rare.
Bethesda, on the hand, will expand its remit to include Obsidian. The Outer Worlds 2 and Avowed developer will continue its work on the Grounded franchise and the already announced Fallout project in collaboration with Bethesda Game Studios.
Playground Games and Turn 10 Studios will merge and become one studio working on Forza and Fable franchises. Turn 10, which handled the Forza Motorsport series, faced significant layoffs last year and was reduced to being a support studio for Playground’s Forza Horizon franchise.
Finally, King will expand its remit to include Microsoft Casual Games, Booty announced.
Ninja Theory Faces Closure
Microsoft also announced that Compulsion Games and Double Fine, two of the studios that were negotiating divestiture from Xbox, returned to independent management with their IP, back catalogs, and runway funding—the same was confirmed by the two studios separately in July.
A question we’ve been getting a lot lately 👀
Yes, Compulsion now owns the rights to South of Midnight, We Happy Few and Contrast.
Buying our games directly supports the studio and helps fund what’s next. 🫶
Haven’t played Contrast yet? It’s 75% off on Steam until Oct. 1! pic.twitter.com/dMMkafv25b— Compulsion Games (@CompulsionGames) September 18, 2026
Compulsion Games confirmed in July that it was looking to collaborate with other studios across the games and entertainment industry and was open to supporting external projects. Double Fine, on the other hand, is running a Kickstarter goal for a game jam to decide on its next project. The studio has already raised over $550,000 from backers for its $400,000 goal.
Like Compulsion and Double Fine, State of Decay 3 developer Undead Labs has successfully transitioned on similar terms and now has a new publisher for the game. State of Decay 3 will still launch day one on Game Pass, Xbox confirmed.
However, Ninja Theory has not had similar success in finding new funding or ownership. Booty announced that two separate agreements for Ninja Theory fell through. While Xbox is in consultation with the studio’s employees over a proposed closure, it also continues to explore other options. The fate of the studio’s next game, Senua, which is set to launch in 2027, remains unclear. Consultation with Arkane remains ongoing and is expected to continue through the end of the year, Xbox confirmed.
“I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them,” Booty said.
“Today, our focus should be on supporting those affected and treating one another with care and respect. I will spend time with our studios over the next week. At our October 6 town hall, we will come together as an all-Xbox team to reflect on our progress and look ahead to one of the strongest game lineups in our history,” he added.
