Microsoft Cuts 268 Xbox Jobs, Hands Over Halo to Activision

Microsoft is pushing forward with a sweeping overhaul of its gaming division. In an internal memo published publicly, Xbox Chief Content Officer Matt Booty confirmed that the company is eliminating 268 roles across its workforce.

The announcement marks the next phase of a multi-stage restructuring strategy first unveiled earlier this summer. Microsoft previously outlined plans to cut approximately 3,200 gaming roles over the course of the fiscal year. Booty noted that with these recent cuts and studio sales, Xbox is roughly three-quarters of the way through its target.

Alongside the staff reductions comes a major shakeup in how Microsoft manages its biggest video game franchises. Activision will take over development for the next mainline Halo game with a brand new, dedicated team. A smaller group will remain at Halo Studios to maintain existing titles and support the active player community. Activision is also absorbing developers Rare and World’s Edge into its operational umbrella.

Other flagship Xbox properties are changing hands internally as well. RPG maker Obsidian will now operate under Bethesda. The team is set to keep working on Grounded while collaborating with Bethesda Game Studios on an unannounced Fallout project.

Meanwhile, racing and fantasy developers Playground Games and Turn 10 Studios are merging into a single unit focused strictly on Forza and Fable. Mobile giant King will handle Microsoft Casual Games moving forward.

Beyond internal merges, Microsoft is actively shrinking its overall studio footprint. Developers Compulsion Games and Double Fine Productions have officially spun out as independent entities, retaining their original intellectual property and receiving runway funding. Undead Labs completed a similar separation under a new publisher, though Microsoft confirmed that State of Decay 3 is still planned as a day-one Game Pass release.

The reorganization highlights Microsoft’s pivot toward running fewer, larger business units rather than maintaining a decentralized network of standalone studios.