Microsoft is restructuring its Xbox Game Studios division, a move that directly impacts the development teams behind major franchises like Halo and Forza. The company is laying off 268 employees across management and central functions to streamline operations. This shift matters to players because it changes which internal teams will lead future releases and how resources are allocated across the studio portfolio.
Major studio realignments and layoffs reshape the Xbox portfolio
The restructuring involves significant moves for several key studios. Halo Studios, Rare, and World's Edge are transferring to Activision. A new team within Activision will take charge of developing the next Halo title, while Halo Studios will focus on supporting existing games. Obsidian Entertainment is moving to Bethesda Softworks. Playground Games and Turn 10 Studios are merging to form a single entity for the Forza and Fable franchises. Microsoft Casual Games is moving to King.
Several other studios are transitioning to independent management. Compulsion Games and Double Fine Productions returned to independent control in August. Undead Labs has also transitioned to independent management and will publish State of Decay 3 on Game Pass. Ninja Theory consultations for closure have begun after previous agreements fell through. Arkane Lyon consultations are ongoing through the end of 2026.
These changes take effect following the announcement on September 22, 2026. The restructuring consolidates several development groups under new leadership structures. Players can expect shifts in project ownership and development timelines for upcoming titles. This restructuring is intended to better coordinate studio resources with Microsoft's overall gaming objectives.
Source: Gematsu
