Xbox Lay Offs Continue With 268 Employees Cut; Activision to Develop Next ‘Halo’ Game as Part of Studio Reorg

Xbox has laid off an additional 268 employees this week as part of its previously announced job-eliminations plan.

The new cuts primarily affect Halo Studios, other first-party studios and the XGS management and central functions layer, Xbox chief content officer Matt Booty said in a memo to staff Tuesday.

Amid the cuts, the Microsoft-owned gaming company has also undergone a studio reorg that will see teams combine under the goal to “strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise,” per Booty.

From here on out, Activision will oversee studios World’s Edge and Rare, and will also be developing the next “Halo” title. According to Booty, this “Halo” game will be “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.”

Other studio changes include Bethesda adding in Obsidian, King combining with Microsoft Casual Games, and Playground and Turn 10 merging into one studio focused on the “Forza” and “Fable” franchises.

In July, new Xbox CEO Asha Sharma announced the company planned to reduce its workforce by up to 3,200 employees — or 20% of total staff — over the next year in the “most significant restructure” in the Microsoft division’s history.

“The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring,” Booty wrote. “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.”

“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,” Activision president Rob Kostich said in a statement. “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.”

Read Booty’s message to staff and the Xbox community, which was shared on Xbox’s official Xbox Wire blog, Tuesday.

Team,

I’m writing to share several updates as part of the XBOX reset outlined earlier this year.

First, we are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer. The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring. 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.

Second, we are reorganizing our studios. 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.

Activision will expand its remit to World’s Edge, as well as Rare. Activision will also be developing the next Halo title, 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.

Bethesda will expand its remit to include Obsidian, which will continue its current projects, including Grounded, as well as the new Fallout project made in collaboration with Bethesda Game Studios.

King will expand its remit to include Microsoft Casual Games, uniting our two global leaders in casual game design and live operations.

Playground and Turn 10 will come together as one studio focused on the Forza and Fable franchises. These two studios have been technological, creative, and franchise partners for over a decade, and today’s changes will formally move their work into one team.

Third, an update on our studio divestitures: In August, Compulsion and Double Fine returned to management with their IP, back catalogs, and runway funding. 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. Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward. Consultation with Arkane remains underway and is expected to continue through the end of the year.

Today, our focus should be on supporting those affected and treating one another with care and respect. 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.