Full Breakdown
Microsoft’s Xbox “Reset”: 268 Jobs Cut, Halo Shifts to Activision, and Ninja Theory Faces Closure
By Drooid · · How we work
Core Event
On Tuesday, Xbox chief content officer Matt Booty announced the elimination of 268 roles across Halo Studios, other first-party studios, and the Xbox Game Studios (XGS) management layer. The cuts move the “reset” of Microsoft’s gaming division, begun in July 2026, to roughly three-quarters of its 3,200-position target. The reorganization places Activision in charge of the next Halo title, moves Rare and World’s Edge under Activision, adds Obsidian to Bethesda, merges Playground Games with Turn 10 Studios, and puts King in charge of Microsoft Casual Games. Ninja Theory enters a consultation process for possible closure after two failed sale attempts, while Arkane remains in consultation through year-end.
Background & Context
The first wave cut 1,600 jobs, including the divestiture of Double Fine and Compulsion Games. Subsequent rounds have targeted additional studios and central functions to streamline operations and focus on core franchises.
Data & Statistics
- 268 Xbox-related positions eliminated (Booty’s memo).
- ?75 % of the 3,200-person restructuring target completed.
- Undead Labs will release State of Decay 3 day-one on Game Pass.
Official Statements & Responses
Booty thanked departing colleagues and pledged personal engagement with studios over the coming week. Asha Sharma’s July memo warned that the division’s “business today is not healthy” and highlighted the need to reduce fragmentation. Activision president Rob Kostich welcomed the integration of Halo, Rare, and World’s Edge, calling it an “honor and a responsibility.”
Verbatim Quotes
- “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,” — Matt Booty
- “We’re thrilled to welcome Halo, Rare, and World’s Edge to Activision. It’s an honor and a responsibility that we do not take lightly. These teams and their games have inspired fans around the world for decades,” — Rob Kostich
Timeline
Why It Matters
Moving Halo development to Activision consolidates Microsoft’s two flagship first-person shooter franchises—Halo and Call of Duty—under a single publisher, reshaping competitive dynamics in the console market. Consolidating studios reduces overhead but also risks talent loss, as seen with Ninja Theory and Arkane. The spin-off of Undead Labs shows Microsoft’s willingness to retain IP while shedding operational responsibilities.
What’s Next
The October 6 town-hall will outline further steps in the reset, including any additional staffing adjustments needed to meet the 3,200-person target. Ongoing consultations with Ninja Theory and Arkane will determine their future status. The newly formed Activision team will begin work on the next mainline Halo title, though a release timeline has not been disclosed.