On September 22, 2026, Xbox boss Matt Booty sent a memo to staff titled Continuing Our Reset. In it he confirmed the elimination of 268 roles across Halo Studios, other first-party studios and the XGS management layer — plus a reorganization that redraws the map of Microsoft’s entire games business.
What Was Announced
- 268 roles cut across Halo Studios, other first-party studios and XGS central functions
- The actions completed since July, including studio divestitures, put Xbox roughly three-quarters of the way through the restructuring announced earlier this year
- Xbox previously set a goal of removing 3,200 roles in total; around 1,600 employees were affected in July alone
The New Publishing Map
| Publisher | Gains |
|---|---|
| Activision | Rare, World’s Edge (Age of Empires) and development of the next Halo game |
| Bethesda | Obsidian Entertainment, which continues Grounded and the new Fallout project built with Bethesda Game Studios |
| King | Microsoft Casual Games |
| Playground + Turn 10 | Merge into one studio focused on Forza and Fable |
The next Halo will be built by a new, purpose-built Activision team kept separate from Call of Duty development, while a small team at Halo Studios continues supporting the live Halo community and games in market.
“The goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise.” — Matt Booty, Xbox, September 22, 2026
Ninja Theory, Undead Labs and the Divestitures
Two separate agreements to sell Ninja Theory — the Cambridge studio behind Hellblade — fell through, so Xbox is now beginning consultation with employees on a proposed closure, while still exploring other paths forward.
Elsewhere in the divestiture program:
- Compulsion and Double Fine returned to management in August with their IP, back catalogues and runway funding
- Undead Labs has now completed a similar transition with a new publisher, and will release State of Decay 3 day one on Game Pass
- Consultation with Arkane remains underway and is expected to run through the end of the year
One day later, Undead Labs confirmed it is now an employee-owned studio, though a “significant number” of employees face layoffs. State of Decay 3 remains on track for 2027.
Who Is Not Affected
GamesIndustry.biz noted that Blizzard, The Coalition (Gears of War) and InXile (Clockwork Revolution) had not yet been touched by the cuts, and Game Developer reported that an internal email confirmed Blizzard is unaffected by this round. Xbox is holding an all-hands town hall on October 6 — the same day Gears of War: E-Day launches.
Why It Matters
This is the most consequential reorganization of Xbox’s studio system since the Activision Blizzard acquisition: franchises that for years had their own identity — Halo, Rare, Age of Empires — now report into the Call of Duty publisher. For players, the near-term effect is a tighter, more concentrated release slate. For developers, it is the continuation of a year in which Microsoft has cut thousands of roles across a division that once promised to be gaming’s most stable employer.
Sources
- XBOX Wire — Continuing Our Reset (Matt Booty, September 22, 2026)
- GamesIndustry.biz — Xbox transfers Rare and Halo franchise to Activision, proposes closure of Ninja Theory, and confirms another 268 roles cut
- The Verge — Microsoft is laying off 268 Xbox staffers and Ninja Theory may close
- The Game Business — Halo to Activision. Xbox merges studios and cuts 268 jobs
- GamesIndustry.biz — Undead Labs confirms it is now an “employee-owned studio”, a “significant number” of employees face layoffs
- Logos retrieved from Wikipedia.