Microsoft has today confirmed that the next mainline Halo game will be developed by Call of Duty maker Activision, with mass layoffs hitting Halo Studios amid a significant restructure of its Xbox studios setup.
Xbox announced 268 layoffs today "across Halo Studios, other first-party studios, and the XGS management and central functions layer" as part of the ongoing cuts first announced in July. The layoffs, the majority of which are at Halo Studios, come as part of new Xbox boss Asha Sharma’s “reset” of Microsoft's gaming business that had already seen 1,600 staff lose their jobs in the summer. At the time, Microsoft said another 1,600 staff on top would also go this financial year.
"The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring," Xbox Chief Content Officer Matt Booty said in a blog post. "I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them."
With Halo Studios gutted, Microsoft has handed Halo to Activision. Activision will develop "the next Halo title," Booty said, "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. A small team at Halo Studios will continue supporting the Halo community and games in-market."
Booty did not say when the next Halo game will come out, or if Activision plans to reboot the series or rotate it into its schedule of releases for Call of Duty, which hasn’t missed an annual release for 20 years.
Halo moving to Activision follows a string of tough releases for the franchise under Xbox's stewardship. Microsoft bought the Halo franchise when it purchased its original developer, Bungie, in 2000. Bungie then split from Microsoft to become independent again in 2007, and went to work on looter shooter Destiny as part of a high-profile, 10-year publishing deal with Activision. Meanwhile, Microsoft set up 343 Industries, so named after 343 Guilty Spark from the Halo games, to take Halo into a new era. 2012's Halo 4 was the first Halo game released by 343. It was followed by 2015's Halo 5: Guardians, which in turn was followed by 2021's much-delayed Halo Infinite. Halo Infinite in particular struggled, and this year's Halo: Campaign Evolved, a remake of the beloved first Halo game, suffered problems of its own.
In 2024, 343 Industries changed its name to Halo Studios and announced plans to work on multiple new Halo games that would all be developed on Epic's Unreal Engine. The announcements were unveiled in a seven-minute video shown ahead of the Halo World Championship's grand finals, which showcased the results of Project Foundry — an experimental project designed to show a Halo game built using Unreal Engine. While it was not much more than a tech demo, the video offered a glimpse at a fresh beginning for Xbox's flagship franchise in the wake of Halo Infinite's troubled launch. The question is, will any of that work be carried forward by Activision? Check out Ryan McCaffrey's reaction to today's Xbox news in his opinion article, Can Activision Save Halo?
Meanwhile, Xbox has moved Age of Empires developer World's Edge and Sea of Thieves developer Rare under the Activision umbrella, without confirming the legendary British studio's next game.
Rob Kostich, president of Activision issued the following statement:
"We’re thrilled to welcome Halo, Rare, and World’s Edge to Activision. It’s an honor and a responsibility that we do not take lightly. These teams and their games have inspired fans around the world for decades.
"For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy, while staying true to what made players love it in the first place. It is a bold ambition, one that this franchise deserves. We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community.
"To the World’s Edge and Rare teams, we can’t wait to get to work together."
Outside Activision, Obsidian, developer of Grounded, The Outer Worlds, and Avowed, is now a Bethesda studio, as it begins work on a new Fallout game. Forza Motorsport developer Turn 10 is being merged with Forza Horizon and Fable developer Playground, and Candy Crush developer King now includes Microsoft Casual Games, which operates the likes of Solitaire, Mahjong, and Minesweeper.
Microsoft has also signalled its intention to close Hellblade developer Ninja Theory after two separate deals for a sale fell through. As per UK employment law, a consultation with staff has begun. Ninja Theory was working on the third entry in the Hellblade series, called Senua, but that game's future is in doubt.
There is no further news on the fate of Blade developer Arkane. Microsoft is currently negotiating with management over the future of the studio, following French employment law, so the process is further behind that of other Xbox studios. Booty said "consultation with Arkane remains underway and is expected to continue through the end of the year."
Psychonauts developer Double Fine and South of Midnight studio Compulsion had already managed to navigate their way to independence as part of the Xbox reset. Today, Booty confirmed that Undead Labs has now "successfully transitioned" on "similar terms" and, with a new publisher, will release State of Decay 3 day one on Game Pass.
"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," Booty added.
Xbox Games Series Tier List
Xbox Games Series Tier List
Today’s dramatic news sparks a number of unanswered questions: what does the future of Halo look like? What does Activision plan to do with Rare and Sea of Thieves? And where will the rest of the layoffs Microsoft announced were in the works in July come from?
The Xbox reset is the most significant restructure in the history of Microsoft's gaming business, and forms part of Sharma's drive to reach a billion people each day through video games by 2030. It follows continued poor financial results for Xbox and a collapsing profit margin, which Sharma has set about turning around by cutting costs and doubling down on big franchises such as Halo, Minecraft, and Fallout.
"Today, our focus should be on supporting those affected and treating one another with care and respect," Booty added. "I will spend time with our studios over the next week. At our October 6 town hall, we will come together as an ALL-XBOX team to reflect on our progress and look ahead to one of the strongest game lineups in our history."
Wesley Yin-Poole
Director, News
Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].