Microsoft is restructuring its gaming division with a major reorganization across its entire internal studio network. The company is cutting 268 positions, assigning the next mainline Halo project to Activision, and consolidating multiple development groups under single banners. But the moves also signal harsh news for individual teams, including the possible shutdown of Ninja Theory.
The job cuts eliminate 268 roles across Halo Studios, central first party management, and support teams. Leadership confirmed these reductions bring the broader internal restructuring plan to roughly 75% completion. The biggest shift lands squarely on the flagship science fiction series. Activision will now establish a dedicated group to build the next mainline Halo title, keeping that team entirely separate from the Call of Duty pipeline. Halo Studios will shrink to a small support group tasked with maintaining active online titles and community operations.
Xbox leadership is consolidating several development branches into larger operational units. Activision will now manage Rare alongside World's Edge. Bethesda is taking over management of Obsidian, which will continue work on Grounded while partnering with Bethesda Game Studios on a fresh Fallout project. King will absorb Microsoft Casual Games to combine mobile design operations.
Playground Games and Turn 10 are formally merging into 1 unified studio. This single team will now oversee both the Forza racing franchise and the upcoming Fable game, ending their run as separate entities after a decade of sharing technology.
Several studios have officially parted ways with Microsoft. Compulsion Games and Double Fine previously regained independence along with their intellectual property rights and operating funds. Undead Labs has now completed a similar exit agreement, ensuring that State of Decay 3 will still launch day 1 on Game Pass through a separate publishing deal.
The outlook is far more uncertain for other creators. Two separate buyout deals for Ninja Theory fell apart during negotiations. Xbox leadership has now opened formal employee talks regarding a potential studio shutdown.
We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward.
Workplace consultations regarding Arkane remain active and are scheduled to run through the end of the year. Studio staff are scheduled to meet at an upcoming all hands town hall meeting to review the reorganization and discuss the future software roadmap.
