Microsoft is making another major change to its gaming business as part of a wider Xbox restructuring. The company announced hundreds of additional job cuts on September 22, while also moving several game studios and projects under different parts of its business.
The latest Microsoft Xbox layoffs 2026 include 268 roles across Xbox Game Studios, including positions connected to Halo Studios, management and other first-party teams. Microsoft said the total number of job cuts across the company is fewer than 600 worldwide, with around 300 affected positions in Washington state.
Next Halo Game Moves to Activision
One of the biggest changes is the move of the next Halo game to Activision. Microsoft acquired Activision in 2023, and the studio will now build a new team specifically for the next Halo project.
Halo Studios will continue with a smaller team in Redmond. Its focus will include supporting current Halo games, the player community and esports activities.
This change is part of Microsoft’s plan to bring related teams together and operate with fewer separate business units.
More Xbox Studios Face Changes
The restructuring goes beyond Halo. Several well-known studios and franchises are being moved or reorganized.
| Studio or Team | New Direction |
|---|---|
| Halo Studios | Smaller team; next Halo moves to Activision |
| World’s Edge | Moves under Activision |
| Rare | Comes under Activision |
| Obsidian Entertainment | Moves under Bethesda |
| Microsoft Casual Games | Moves under King |
| Turn 10 & Playground Games | Merge into one studio |
| Undead Labs | Becomes independent |
| Ninja Theory | Possible closure or sale |
| Arkane France | Outcome still pending |
Obsidian Entertainment will become part of Bethesda, bringing its Fallout-related work closer to Bethesda’s wider franchise operations. Microsoft Casual Games, which develops titles such as Solitaire, will move under King, the company behind Candy Crush.
Turn 10 Studios and Playground Games will also merge. The combined team will work on both the Forza racing series and Fable.
Xbox Restructuring Is About 75% Complete
Microsoft announced in July that Xbox would cut around 3,200 positions by the end of its fiscal year. The company said the latest changes are included in that previously announced figure.
According to Microsoft, about 75% of the Xbox restructuring is now complete. The main goal is to reduce the number of separate business units and focus resources on major franchises and games.
Ninja Theory remains uncertain after two possible handoff deals failed. Microsoft says it still hopes to find a new owner, but the studio could eventually close.
Microsoft Continues Hiring in Other Areas
The layoffs are happening alongside continued hiring in selected parts of Microsoft. The company said 850 university hires started in August, while around 1,300 interns worked during the summer.
The broader technology industry is also cutting jobs as companies control costs while investing heavily in artificial intelligence and cloud infrastructure.
For Xbox players, the biggest question now is how these changes will affect major franchises. The move of the next Halo project to Activision, along with several studio mergers and transfers, shows that Microsoft is taking a different approach to managing its gaming business.
