Xbox’s Latest Restructuring Puts Call of Duty Developer Activision in Charge of Halo

Longtime Halo fans have only ever known two studios to develop the Halo franchise: Bungie and 343 Industries, which was later renamed Halo Studios. Microsoft has now thrown a curveball by entrusting the next iteration of the iconic FPS to Activision. 

On Tuesday, a statement titled “Continuing Our Reset” was sent to global Team Xbox employees, announcing a larger restructuring that included the elimination of 268 roles from Halo Studios, other “first party” studios, and XGS management and central functions. The statement said it will create a dedicated, separate team to develop the next Halo game, distinct from its Call of Duty operations, and that a smaller team at Halo Studios will remain focused on supporting the current community and existing games.

It’s been quite some time since the Halo series switched hands. The final Halo game developed by Bungie was Halo: Reach in 2010, and Halo Studios has helmed the project ever since, up to and including the studio’s now-final release, Halo: Campaign Evolved, which received critical acclaim upon its launch earlier in 2026.

It also isn’t the first time Activision has assisted in a property that Bungie originally made. The two studios famously worked on Bungie’s Destiny franchise from 2010 until a rather messy public split in 2019, before Activision was acquired by Microsoft in 2022. Activision helped develop Bungie by bringing in external studios like Vicarious Visions and High Moon Studios to support PC and accelerate the development of new content.

This current “reset” marks a complete pivot in Xbox’s strategy and is part of Microsoft’s cost-cutting restructuring efforts, which the company began after Xbox CEO Asha Sharma said the business “is not healthy.” In July, the company announced 3,200 layoffs over the next year due to a struggling business and stagnant growth in Game Pass.

The end of an era

Activision is now the developer of Xbox’s two biggest FPS franchises, Call of Duty and Halo, a reality that no one playing either franchise in 2009 would’ve believed if you’d told them back then. The two games shared a rather intense rivalry during the 2000s that softened over time, with Battlefield largely replacing Halo in the broader gaming lexicon as Call of Duty’s biggest rival.

“This feels like the end of an era,” said CNET senior writer Zachary McAuliffe. “Halo is a franchise that is largely synonymous with Xbox as a brand, so Microsoft handing the franchise to Activision feels like the company cutting off its nose to spite its face. It’s ironic because Call of Duty, Activision’s largest franchise, was Halo’s main gaming rivalry. Now that Activision controls Halo, it feels like Call of Duty won that rivalry.”

McAuliffe also points out that with Activision in control, it may subject Halo to some Activision habits, like annualized releases much like we see with Call of Duty games, and with a story-focused game like Halo, that may stifle creativity and cause the games to “feel flat.” A future like that would almost certainly cause Halo to lose its identity and become just a Call of Duty clone set in space. 

There aren’t any details about the next Halo game yet, except that it’ll be made by Activision.

The big Xbox restructure continues

Tuesday’s move is likely to be a massive deal in the gaming world because it outlines a radical, fundamental restructuring of Xbox’s first-party studios, including drastic changes to some of the most iconic franchises and developers in the industry.

Activision is also taking control of World’s Edge and Rare, developers of Age of Empires and Sea of Thieves, respectively. Bethesda is taking Obsidian under its wing, the developer of the next Fallout game. Candy Crush developer King is taking control of Microsoft Casual Games to combine the casual games segment under one roof. Finally, Playground and Turn 10 are being merged into a single studio, combining Forza and Fable under one roof. 

According to the announcement, Double Fine, Compulsion, and Undead Labs have successfully returned to being independent studios. Ninja Theory had two agreements fall through and is now in the process of being closed down for good, with its final release, Senua, still slated for 2027.

With these changes, Microsoft’s restructuring efforts aren’t yet over. “The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring,” the statement read.