Microsoft Reworks Xbox Studios: Activision Takes Over the Next Halo

Microsoft’s Xbox games division has announced a studio reorganization that cuts 268 roles and shifts several first-party teams under new owners or new mandates. The cuts are spread across the affected teams, with Halo Studios named among them. The headline item: the next Halo will be developed by Activision, while Halo Studios — the team that has carried the franchise — moves into a support role.

Halo gets a new lead developer

343 Industries, renamed Halo Studios in 2024, took over the series after Bungie stepped away, starting with Halo 4 and running through Halo Infinite, whose release slipped from 2020 to 2021. Under the new arrangement it will assist rather than lead.

Handing Xbox’s oldest flagship to a different studio inside the same company is not a routine move. Activision’s staffing and schedules are largely built around Call of Duty, and nothing has been said about which team will actually run the new Halo or how the work will be divided. The announcement names a developer but not a plan.

Mergers, a demotion, and a probable closure

Obsidian will become part of Bethesda and will continue working on Grounded and a new Fallout game — a sign that being folded into a larger label does not immediately halt projects already in motion. On mobile, King will absorb Microsoft Casual Games. Playground and Turn 10 will merge into a single studio; the two are associated with the Forza series and the new Fable project respectively. Ninja Theory is expected to close, and Arkane’s status is still under discussion. Both have shipped distinctive games in recent years, so the decisions look like a question of portfolio shape rather than individual titles.

Read as a group, the moves point one direction: studios that can carry a product line on their own get placed inside bigger brands, and those that cannot get merged or shut. Bethesda and King already have clear product structures, which makes them convenient containers.

The labels Microsoft already paid for

Bethesda arrived with the ZeniMax acquisition in 2021. King arrived with the Activision Blizzard deal, which closed in 2023. Putting Obsidian under Bethesda and folding Microsoft Casual Games into King turns those acquired labels into the organizing layer for teams that previously reported directly into Xbox. Halo Studios’ demotion follows the same logic: instead of a dedicated first-party team per franchise, the company is using organizations it already owns to house the work. That is a structural change, and it is cheaper than building new teams.

What 268 roles tells you

Two hundred and sixty-eight people is not a startling number against the size of Microsoft’s gaming business. That it lands on first-party studios is more telling: the target is structure, not only cost. Mergers, reduced responsibilities, and closures appearing in the same announcement mean resources are being pulled toward fewer projects that can keep producing.

For players, the near-term effect is a new developer credit on Halo and a set of smaller projects whose fate depends on announcements still to come. What Halo becomes under Activision is the question that will take years, not weeks, to answer.