Halo Studios Shrinks to 20 Staff as Activision Takes Over Franchise

Key points

• Xbox eliminated 268 roles across Halo Studios and other units on September 22, 2026.
• Activision will lead development of the next Halo game with a new, dedicated team.
• A small team at Halo Studios will remain to support the community and existing games.
• The restructuring consolidates studios, including merging Bethesda with Obsidian and Playground with Turn 10.
• Ninja Theory faces closure after failed divestment agreements, while Undead Labs transitions to a new publisher.

Background

Microsoft began a major Xbox restructuring in July 2026, aiming to cut 20% of its gaming workforce. Previous reports indicated Halo Studios was already outsourcing development and exploring partnerships with Activision’s Sledgehammer Games. The September 22 announcement formalized the transfer of Halo development to Activision, following earlier divestitures of Compulsion and Double Fine.

How outlets are covering it

Insider Gaming cites pro player aPureGangster, claiming only 20 employees remain at Halo Studios, a figure it notes is unverified but aligns with Windows Central’s report of 'major layoffs in the 100s.' Xbox Wire and Business Insider confirm the official cut of 268 roles and the transfer of Halo development to Activision. Business Insider highlights the broader context of Microsoft’s 20% workforce reduction target, while Xbox Wire details the consolidation of other studios, such as King absorbing Microsoft Casual Games. All sources agree on the strategic shift but differ on the precise scale of remaining staff at Halo Studios.

Why it matters

The transfer of Halo to Activision signals a significant shift in Microsoft’s gaming strategy, prioritizing consolidation and efficiency over maintaining separate first-party studios. The drastic reduction in Halo Studios’ staff raises questions about the future of the franchise and the stability of other Xbox titles. This restructuring also impacts the broader gaming industry, as studios like Ninja Theory face closure and others like Undead Labs transition to new publishers.

What to watch

Microsoft will hold an all-Xbox town hall on October 6, 2026, to discuss progress and future plans. Activision will begin developing the next Halo title with a new team, while the remaining Halo Studios staff focus on community support. Consultations with Arkane employees are expected to continue through the end of 2026, and Ninja Theory’s closure process will proceed as Microsoft explores other options.