What to know | Xbox Cuts 268 More Jobs: Next 'Halo' Game Handed to Activision, Ninja Theory Faces Shutdown

Development rights for a game pulled from one studio and handed off to a newly formed team under a different division — that's the most concrete change in this latest round of Xbox restructuring. The "reset" plan Xbox announced back in July is still unfolding, and this time it means 268 layoffs along with folding some studios into different management structures.

In an internal memo made public, Xbox Executive Vice President and Chief Content Officer Matt Booty explained that the layoffs affect Halo Studios, other first-party development teams, and management plus central functions within Xbox Game Studios. He wrote, "The actions we've taken since July, including studio sales, have brought us to roughly three-quarters of the way through the reorganization plan we previously announced." That July round of cuts affected 1,600 employees, with Xbox saying at the time that an equal number of cuts would follow over the next year.

Halo Studios appears to be the hardest hit in this round, but Booty says Xbox isn't shutting the studio down entirely — a small team will remain to "continue supporting the Halo community and live titles." The real shift here: the next Halo game will be developed by a newly formed team under Activision. Activision will also take over oversight of Rare, as well as Age of Empires developer World's Edge.

Reporting lines for other studios are being reshuffled too. Obsidian, which was only recently tapped to develop the new Fallout game, will now fall under Bethesda. King will oversee Microsoft Casual Games, while Playground and Turn 10 will merge into a single team continuing to focus on the Forza and Fable franchises.

Booty also noted that Compulsion Games and Double Fine Productions have been spun off as independent studios, receiving operating funds along with rights to their own IP and catalogs. Microsoft has also sold Undead Labs, though State of Decay 3 will still land on Game Pass under its new publisher.

Ninja Theory's situation, by comparison, looks far more dire. Booty said two separate deals to sell the studio have both fallen through, leaving it facing possible closure. "We will now begin conversations with employees about a proposed closure plan, while continuing to explore other potential paths forward," he wrote. Arkane Studios, based in Lyon, France, is also among the studios Xbox is considering selling; under French law, Xbox must first enter a consultation period to evaluate options including sale, spinoff, or closure — a process Booty says is expected to run through the end of 2026.