Call of Duty studio takes over Halo franchise amid new Xbox layoffs

Microsoft has handed development of the next Halo game to Activision, the studio behind Call of Duty, in the latest wave of cuts to its Xbox business. Alongside the move, Halo Studios — the series' longtime home — has been reduced to a support role for existing Halo titles, with 268 people laid off. For a franchise that spent decades defined in part by its contrast with Call of Duty, the reunion under one roof is a striking turn.

The Layoffs and the Restructuring

Xbox chief creative officer Rob Booty announced the changes in an Xbox Newswire post titled "continuing our reset." According to the announcement, 268 employees are being let go "across Halo Studios, other first-party studios, and the XGS management and central functions layer." Microsoft has not yet specified exactly which roles or teams are affected.

This follows July's announcement of plans to cut 1,600 staff, paired with several studio closures and divestitures. At that time, Microsoft said it hoped to reduce its workforce by 3,200 people in total over the coming financial year.

As part of the new round, Xbox is consolidating studios and reassigning projects. Booty stated that Activision is now making the next Halo game, "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty." He added that "a small team at Halo Studios will continue supporting the Halo community and games in-market."

From Bungie's Successor to Support Studio

Halo Studios, formerly known as 343 Industries, was established in 2007 to oversee the franchise after original creators Bungie regained their independence from Microsoft. The studio's history includes Halo 4, Halo 5: Guardians, Halo Infinite, and work on Halo: The Master Chief Collection.

The 2024 rebrand was meant to signal a fresh start for Halo — though that new chapter involved another remake, with development moving from the in-house Slipspace Engine to Unreal Engine 5. Since then, the studio has been hit by repeated rounds of major Microsoft layoffs following the post-pandemic gaming slowdown. The recent Halo: Campaign Evolved does not appear to have gained much traction, although Microsoft has not published full sales figures.

Two Very Different Shooters

Booty's emphasis on separating the new Halo team from Call of Duty's development hints at expected pushback from Halo fans who view Call of Duty as everything their franchise should not be. Historically, the two series diverge sharply: Call of Duty centers on aimed-down-sights gunplay, multiplayer progression, and tight infantry combat, while Halo has always leaned toward sandbox play with vehicles, a longer time-to-kill, and map-placed equipment.

Call of Duty's enormous commercial success has pushed successive Halo teams to borrow more ideas from Activision's shooter over the years, yet even Halo Infinite remains a clearly distinct game from recent Call of Duty entries. The idea of Halo now operating under the same roof is, at minimum, an odd one for longtime fans.

Support for Affected Workers

Beyond design debates, the immediate reality is that many employees are losing their jobs. Messages of support have appeared from developers across the industry on LinkedIn, including one from former 343 art director Glenn Israel, who left in October 2025. Israel has previously accused "senior Halo representatives" of forcing him out, arguing that corporate "restructuring" gives leadership a chance to settle scores with difficult staff. Addressing developers hit by the cuts, he wrote: "you are not alone and I have resources to share." Former Halo Studios senior software development engineer Bill Rosas kept it brief: "good luck today, Halo friends."

The next Halo game now takes shape inside Activision, while Halo Studios' remaining staff keep the existing games running. Whether this structure holds through Microsoft's ongoing financial year of cuts remains to be seen.

Source: the original publisher