Xbox cuts 268 jobs amid restructuring of Halo, Rare, Obsidian, Forza, Fable studios

Xbox has carried out a second round of layoffs and internal restructuring this year, cutting 268 roles just months after July's cuts of around 1,600 staff and the divestment of several studios. The news matters to players because it reshuffles some of Microsoft's best-known franchises — including Halo, now placed under Activision's oversight.

What Xbox Announced

In a message to staff later published on Xbox Wire, Xbox chief content officer Matt Booty confirmed the scale of the cuts: "We are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer." He added that the actions taken since July, including studio divestitures, have brought the company "roughly three-quarters of the way through previously announced restructuring."

According to Booty, the reorganization is meant to strengthen Xbox's franchises and games by running fewer business units, bringing closer-aligned teams together, and concentrating publishing expertise.

Where the Franchises Are Heading

The biggest headline change is Halo: the series now sits with Activision. A newly built team, described as separate from ongoing Call of Duty development and plans, will work on the next Halo entry, while what remains of Halo Studios will support the existing Halo community and games already on the market.

Activision also takes charge of World's Edge, the Age of Empires studio, and Rare, the team behind Sea of Thieves.

Elsewhere, Obsidian — the studio behind The Outer Worlds and Avowed — has been folded into Bethesda, a move foreshadowed when the studio's work was redirected to a new Fallout game after the July layoffs. Playground Games and Turn 10 Studios, the teams behind Forza and Fable, have been merged into a single studio that will build new entries in both series. Mobile giant King has absorbed Microsoft Casual Games, whose portfolio includes Microsoft's solitaire, sudoku and mahjong apps.

July's Casualties: Where Things Stand

Booty also updated staff on the studios Xbox parted with in July. Ninja Theory, best known for Hellblade, is consulting on a likely closure after two acquisition deals fell through. Undead Labs avoided that fate, as did Compulsion Games and Double Fine, by becoming independent, employee-owned studios — Undead Labs has found a new publisher for State of Decay 3, which still aims for a 2027 release. Arkane, the Dishonored developer, remains in limbo, with consultation over its future expected to run through the end of the year.

Union Response

A spokesperson for the Communications Workers of America told RPS: "Today, 268 dedicated video game workers lost their livelihoods as Xbox continues to put profits ahead of the workers who are the heart and soul of the platform's games." The union said it does not expect this round of layoffs to affect union-represented workers.

The CWA also highlighted that its members at Blizzard Entertainment secured layoff protections and recall rights earlier this month in what it called a breakthrough contract that could set new industry standards. The union's message to remaining workers: "join us."

Update: According to an internal email seen by Game Developer, Blizzard developers have been told they are unaffected by "today's announcements" — though that wording leaves open the possibility of future cuts as Xbox completes the remaining portion of its restructuring.

Xbox parent company Microsoft remains subject to a BDS movement boycott over its reported ties to the Israeli military.

Source: Rock Paper Shotgun