Report: Activision Takes Over Halo, Sea of Thieves, Age of Empires as More Huge Layoffs Hit Xbox Studios
Microsoft announced another wave of restructuring for Xbox on September 22, eliminating 268 jobs across studios and management. The cuts represent the second phase of Xbox CEO Asha Sharma’s planned 3,200-person workforce reduction, with 1,600 laid off in July and approximately 1,400 more expected by June 2027.
The most significant change involves the Halo franchise. Halo Studios will be drastically reduced to a small support team managing existing titles like Halo Infinite and Halo: Campaign Evolved. Development of the next mainline Halo game is being handed to Activision, which will create a dedicated team separate from its Call of Duty division.
Activision is also taking control of Rare (Sea of Thieves) and World’s Edge (Age of Empires), consolidating major franchises under the publisher. Meanwhile, Obsidian Entertainment moves under Bethesda’s umbrella, though the studio will continue current projects including Grounded and its new Fallout collaboration.
Other changes include the merger of Forza developers Playground Games and Turn 10 into a single studio focused on Forza Horizon and Fable. Ninja Theory, developer of the Hellblade series, faces proposed closure after two separate acquisition deals fell through, though Microsoft stated it’s “continuing to explore other paths forward.”
Undead Labs, developer of State of Decay 3, successfully separated from Xbox and became an independent, employee-owned studio. The game will still launch on Game Pass day-one.
Xbox leadership stated the company is approximately three-quarters through its restructuring plan, indicating additional layoffs and changes remain.
Sources
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