Xbox has eliminated 268 more roles across its first-party studios and management layer, while simultaneously restructuring its entire studio organization. The move hands the next Halo game to Activision and folds several beloved studios under new corporate parents.
In a memo published on Xbox Wire, Xbox chief content officer Matt Booty confirmed the cuts bring the division roughly three-quarters of the way through its previously announced restructuring plan. The layoffs primarily affect Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer.
Activision Takes the Helm of Halo
The most striking change is the handoff of the Halo franchise to Activision. A new, purpose-built team separate from Call of Duty development will create the next Halo title. A small team at Halo Studios will remain to support the existing Halo community and games in the market. This marks the first time the franchise that defined Xbox will be developed outside its original studio home.
Activision is also absorbing World’s Edge, the studio behind Age of Empires, and Rare, known for Sea of Thieves. Both franchises are available on Steam, making this a significant shift for PC players.
Obsidian Moves Under Bethesda
Obsidian Entertainment, the studio behind The Outer Worlds and Avowed, is now part of Bethesda’s publishing umbrella. Obsidian will continue its current projects, including Grounded, as well as a new Fallout game developed in collaboration with Bethesda Game Studios.
Playground and Turn 10 Merge
Playground Games and Turn 10 Studios, the teams behind Forza Horizon and Forza Motorsport, are formally merging into a single studio. The combined team will focus on both the Forza and Fable franchises. Forza Horizon 5 remains one of the most popular racing games on Steam.
Studio Divestitures and Closure Talks
The memo also provided updates on studios Xbox parted ways with in July. Compulsion Games and Double Fine returned to independent management with their IP and back catalogs. Undead Labs successfully transitioned to an independent, employee-owned studio and will release State of Decay 3 day one on Game Pass.
Ninja Theory, the Hellblade developer, is consulting on a proposed closure after two acquisition deals fell through. Arkane’s future remains uncertain, with consultation expected to continue through year’s end.
Impact on PC and Steam Players
The restructuring has direct implications for PC gaming. Halo: The Master Chief Collection and Halo Infinite are both on Steam, and the next Halo title will likely follow. Sea of Thieves, Age of Empires, Forza Horizon, Forza Motorsport, The Outer Worlds, and Avowed all have significant Steam player bases.
Whether Activision’s involvement improves or complicates these franchises remains to be seen, but the scale of this restructuring signals a fundamentally different Xbox going forward.
Jordan Hayes covers PC gaming news, hardware, and the ever-changing Steam ecosystem for SteamGamer.net. He believes some of gaming’s biggest stories are hiding in patch notes, performance charts, and suspiciously quiet price changes. When he isn’t investigating what developers or GPU manufacturers are doing, he is probably starting another roguelike run he insists will be his last.
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