Xbox has announced another major round of restructuring, and this time the changes go far beyond job cuts.
Microsoft is reorganizing several of its biggest studios, moving major franchises between divisions, combining development teams, and preparing to potentially close Ninja Theory.
The latest announcement is part of Microsoft’s ongoing Xbox reset, which began earlier this year.
Xbox says the changes completed since July have taken the restructuring roughly three-quarters of the way toward completion.
Here is everything announced by Xbox today.
Xbox Cuts 268 More Jobs
Xbox has confirmed that it is eliminating 268 roles across Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions teams.
These cuts are part of the larger restructuring announced earlier this year.
Microsoft had previously said that approximately 3,200 roles would be affected during its 2027 fiscal year, with around 1,600 positions eliminated in the first phase of the reset.
Xbox says the latest changes are intended to reduce the number of business units and align teams that already work closely together.
Activision Is Developing the Next Halo Game
The biggest gaming announcement is that Activision will develop the next major Halo game.
Xbox says Activision is creating a new, purpose-built team for the franchise. The team will be separate from Activision’s existing Call of Duty development operations.
Halo Studios will not disappear completely. A smaller team will remain responsible for supporting existing Halo games and the current community, while Activision takes responsibility for developing the next major title.
This represents a major change for Halo, which has historically been developed internally by Microsoft’s own Halo-focused studio.
Activision Also Takes On Rare and World’s Edge
Activision’s expanded responsibilities are not limited to Halo.
Xbox is also moving Rare and World’s Edge under Activision’s remit. Rare is best known for Sea of Thieves, while World’s Edge oversees the Age of Empires franchise.
This effectively places several major Xbox franchises under Activision’s broader organizational structure.
Obsidian Moves Under Bethesda
Obsidian Entertainment is also being reorganized under Bethesda.
The move does not mean Obsidian’s current projects are being cancelled.
Xbox says the studio will continue working on its existing games, including Grounded, as well as the new Fallout project being developed alongside Bethesda Game Studios.
The change instead alters how the studio fits into Microsoft’s first-party structure.
Playground Games and Turn 10 Are Merging
Xbox is combining two of its major racing and RPG development teams.
Playground Games and Turn 10 Studios will become one studio, with the unified team focused on the Forza and Fable franchises.
Playground Games is best known for Forza Horizon and has also been developing the new Fable. Turn 10 has traditionally been responsible for Forza Motorsport.
Xbox says the two teams have worked together as technological, creative, and franchise partners for more than a decade, and the restructuring will formally bring them together.
The announcement also raises questions about the future of Forza Motorsport, although Xbox has not announced the cancellation of the franchise.
King Takes Over Microsoft Casual Games
Microsoft is also combining its casual gaming operations.
King will expand its responsibilities to include Microsoft Casual Games, bringing the two organizations together around casual game development and live operations.
The move is part of Microsoft’s broader effort to reduce the number of separate operating groups across Xbox.
Compulsion Games and Double Fine Are Now Independent
Xbox has confirmed that Compulsion Games and Double Fine Productions have completed their transition to new management.
Both studios have taken their intellectual property, back catalogues, and funding runway with them as they move forward independently from Xbox.
This means games and future projects from these developers will no longer be developed as part of Microsoft’s first-party studio structure.
Undead Labs Has Also Left Xbox
Undead Labs has completed a similar transition.
The studio, known for the State of Decay franchise, is now operating under new management and a new publisher.
Importantly, Xbox confirmed that State of Decay 3 will still launch day one on Game Pass under the new arrangement.
So far, the change in ownership has not altered the game’s confirmed Game Pass launch plan.
Ninja Theory Faces a Proposed Closure
One of the most significant developments concerns Ninja Theory, the studio behind Hellblade and Senua’s Saga: Hellblade II.
Xbox says two separate agreements to transfer the studio to new ownership have fallen through. As a result, Microsoft will begin consultation with employees regarding a proposed closure.
However, the closure is not yet final. Xbox says it will continue exploring other options while the consultation process takes place.
Arkane’s Future Is Still Being Discussed
Xbox also provided an update on Arkane.
Consultation regarding the studio remains underway and is expected to continue through the end of 2026. Microsoft has not announced a final outcome for the studio.
The situation is therefore still developing, and Xbox has not confirmed that Arkane will close.
What Happens to Halo Studios?
Halo Studios will have a significantly different role going forward.
Rather than being responsible for the next major Halo game, the studio will retain a smaller team focused on supporting the existing Halo games and community.
Activision will meanwhile establish a separate team to develop the next major Halo title.
The announcement does not provide a release date, gameplay details or title for Activision’s Halo project.
Are Xbox’s Games Being Cancelled?
Today’s announcement does not include a blanket cancellation of Xbox’s publicly announced games.
The restructuring instead changes which studios and divisions are responsible for various franchises.
Xbox has specifically confirmed that Obsidian will continue its current projects, while State of Decay 3 remains planned for a day-one Game Pass launch.
The future of individual projects may become clearer as the restructuring continues.
Xbox Will Discuss the Reset Again on October 6
Xbox says it will hold an all-Xbox town hall on October 6, where employees will come together to reflect on the restructuring and look ahead to the company’s upcoming game lineup.
That means today’s announcement may not be the final word on Microsoft’s new studio structure.
Xbox Reset: What’s Changed?
The September 22 announcement fundamentally changes how several Xbox franchises are organized.
The next Halo game is moving to Activision, Rare and World’s Edge are also being placed under Activision’s remit, Obsidian is moving under Bethesda, and Playground Games and Turn 10 are becoming a single studio focused on Forza and Fable.
Meanwhile, Compulsion Games, Double Fine and Undead Labs have transitioned away from Xbox ownership, while Ninja Theory faces consultation over a proposed closure and Arkane’s future remains under discussion.
For Xbox players, many of these changes will happen behind the scenes, but the impact could become much more visible over the coming years as the newly reorganized teams begin shipping their games.
This article will be updated as Xbox reveals more information about its restructuring and upcoming games.
