Xbox lays off 268 more people as Activision takes over Halo and Bethesda absorbs Obsidian

In a nutshell: The next round of Microsoft’s previously announced layoffs includes major studio consolidations and possibly more closures. The Halo franchise just got its biggest shakeup in years as the Xbox manufacturer seeks to cut costs and the number of moving parts. Meanwhile, the fates of Ninja Theory and Arkane Lyon hang in the balance.

Microsoft has cut another 268 jobs across Halo Studios, other first-party developers, and Xbox Game Studios management. The redundancies, announced by Matt Booty, Xbox’s Chief Content Officer, are presumably part of the 1,600 set to occur through July 2027.

This stage of Xbox’s reorganization involves multiple mergers and reassignments. Most notably, Call of Duty maker Activision is taking over development of the next Halo title with a new team. Halo Studios will focus on already-released entries such as Halo: Campaign Evolved and Halo: The Master Chief Collection. Activision will also manage Rare as well as Age of Empires developer World’s Edge.

Meanwhile, Obsidian will continue its current projects under Bethesda. The two RPG houses are collaborating on a new Fallout title, while Obsidian is also developing Grounded 2 and Bethesda continues work on The Elder Scrolls VI.

Xbox’s most widely anticipated game, The Elder Scrolls VI is likely still at least two years away despite having been announced all the way back in 2018. Candy Crush developer King will also manage Microsoft Casual Games, while Playground and Turn 10 will merge to handle Forza and Fable as one studio.

Unfortunately, Microsoft couldn’t find a buyer for Hellblade developer Ninja Theory despite two separate attempts. While a closure still isn’t inevitable, it seems much more likely now. Attempts to sell Arkane Lyon (Deathloop, Blade) will continue through the end of the year.

Microsoft layoffs since 2023

The layoffs are part of a massive wave that began in July, when Microsoft eliminated around 1,600 positions across Bethesda, id Software, and other subsidiaries. As a result of that initial round, Double Fine (Keeper, Psychonauts 2) and Compulsion Games (South of Midnight) became independent with their back catalogs intact.

Microsoft also announced this week that Undead Labs will continue developing State of Decay 3 under a new publisher. The job losses from July 2026 to July 2027 will total around 3,200, bringing Microsoft’s layoffs since 2023 to about 44,000.

Booty also teased Xbox-related announcements coming on October 6, the day before Microsoft’s first Surface event in more than two years.