Xbox cuts 268 jobs and hands Halo development to Activision in major studio shakeup

Microsoft cut 268 jobs across its Xbox division on September 22 and announced that the next mainline Halo game will be developed by a new team at Activision. The move effectively takes Xbox’s most recognizable franchise out of the hands of the studio that built it and places it under the publisher best known for Call of Duty.

The layoffs in context

The 268 positions eliminated came primarily from Halo Studios and Xbox’s central operations functions. But this round is just the latest chapter in a much larger story. Back in July 2026, Xbox CEO Asha Sharma announced a “reset” targeting approximately 3,200 job cuts, roughly 20% of the division’s workforce. With this latest round, about 75% of those planned reductions are now complete, following an earlier wave that cut 1,600 employees over the summer.

Since Microsoft closed its $69 billion acquisition of Activision Blizzard in 2023, cumulative layoffs across the company have reached around 44,000 positions.

Activision takes the wheel

Activision President Rob Kostich committed to creating what he described as the most esteemed Halo title to date. The new Halo team at Activision will operate separately from the Call of Duty development pipeline. Meanwhile, the remnants of Halo Studios will continue supporting existing titles, including the 2026 release of Halo: Campaign Evolved.

The Halo transfer is the headline, but it’s far from the only studio reorganization in this wave. Rare and World’s Edge are also moving under Activision’s umbrella. Obsidian will shift to Bethesda’s management. Playground Games is merging with Turn 10 Studios.

Xbox Chief Content Officer Matt Booty framed the overhaul as a push toward operating fewer, more focused business units with deeper publishing expertise.