Xbox restructures studios, cuts 268 roles

On September 22, 2026, Microsoft’s (MSFT) Xbox unit announced that it is eliminating 268 roles as part of a restructuring of its game development operations. The changes affect multiple studios and are tied to a broader reorganization of how key franchises and teams are managed within the gaming division.

The reductions include staff at Halo Studios, which is being refocused on supporting existing Halo titles in the market. While the total number of employees at each affected studio is not detailed, the 268 job cuts reflect a significant adjustment to the division’s workforce structure.

As part of the restructuring, Activision has been tasked with developing the next mainline Halo title. The project will be handled by a new, purpose-built team that is kept separate from Activision’s ongoing Call of Duty development, indicating a distinct organizational track for the Halo franchise under Activision’s leadership.

Halo Studios will continue operating but with a smaller team, focused on sustaining and supporting current Halo games that are already in the market. Forward development on the next Halo entry will now reside with the new Activision-led team, while existing live operations and updates remain with Halo Studios.

The restructuring also shifts oversight of Rare and World’s Edge to Activision. Rare, known within the Xbox portfolio, and World’s Edge, associated with the Age of Empires series, will both operate under Activision’s management following the reorganization.

This consolidation brings more of Xbox’s internal studios under Activision’s umbrella, aligning multiple franchises and teams within a single organizational structure. Specific project plans for Rare and World’s Edge under the new oversight are not detailed, but their reporting lines are clearly defined in the new arrangement.

Beyond the studios moving to Activision, the restructuring also affects Obsidian Entertainment. Obsidian will now report under Bethesda Game Studios, creating another internal shift in how Xbox’s development teams are grouped and managed.

The reorganization places several prominent development houses into new reporting structures within the wider Xbox ecosystem. Combined with the 268 role reductions and the transfer of Halo’s future development to Activision, these moves mark a notable realignment of Xbox’s first-party studio organization.