Microsoft’s gaming division is undergoing a seismic shift as it executes a massive “reset” of its internal business structure. In a series of high-profile moves announced this morning via Xbox Wire, the company confirmed it is transferring the stewardship of its most iconic franchise, Halo, along with the legendary UK-based developer Rare, to Activision. The announcement also included the news of hundreds of additional layoffs and the potential shuttering of Ninja Theory, signaling a ruthless prioritization of core intellectual properties over studio variety.
What happened
The restructuring involves several complex maneuvers across the Xbox Game Studios and ZeniMax portfolios. Most notably, ownership of the Halo IP and the studio Rare—the creators of Sea of Thieves—has been moved under the Activision umbrella. This consolidation brings Microsoft’s two biggest shooter franchises, Halo and Call of Duty, under a single management structure.
Simultaneously, Xbox announced that it has begun a consultation process regarding the proposed closure of Ninja Theory, the developer behind Senua’s Saga: Hellblade II. This comes after unsuccessful attempts to sell the studio to a third party. Meanwhile, State of Decay developer Undead Labs has found a buyer and will transition to a new publisher, though the upcoming State of Decay 3 is still slated for a day-one release on Game Pass. In another internal shuffle, Obsidian Entertainment is being moved under the Bethesda label.
These organizational changes are accompanied by 268 new job cuts, primarily affecting Halo Studios (formerly 343 Industries). This brings the company closer to its annual goal of reducing its workforce by 3,200 roles, a target the firm says is now approximately 75% complete.
Context
This “resetting of the business,” a term used by CEO Asha Sharma, follows a turbulent few years for Xbox’s first-party output. Halo Studios, which was rebranded from 343 Industries just last year, has struggled to maintain a consistent release cadence. While their recent remake, Halo: Campaign Evolved, was well-received, the studio has long been hampered by technical hurdles with its proprietary Slipspace engine and significant leadership turnover following the release of Halo Infinite.
The move to Activision appears to be an attempt to apply that division’s rigorous production efficiency to the Halo brand. While Halo Studios will maintain a small team to support existing titles, the next major entry in the series will be developed by a new team separate from the Call of Duty pipeline.
This restructuring also follows a trend of divestment for Xbox. Within the last month, both Compulsion Games and Double Fine regained their independence, showing a clear move away from the aggressive studio acquisition strategy Microsoft famously pursued a few years ago.
Why it matters
The transfer of Halo and Rare to Activision represents the end of an era for Xbox Game Studios. By placing its two most valuable shooter IPs under one roof, Microsoft is signaling a shift toward a more centralized, franchise-focused business model. The goal is clearly to reduce fragmentation and ensure that major titles like Fallout, Diablo, and now Halo receive the bulk of the company’s resources.
However, the human cost of this transition is significant. The proposed closure of Ninja Theory and the continuing layoffs across ZeniMax and Halo Studios highlight the ongoing volatility within the gaming industry. For fans, the news is a double-edged sword: while Activision’s oversight might lead to more frequent Halo releases, the loss of independent-minded studios like Ninja Theory suggests a narrower, more risk-averse future for the Xbox ecosystem. As Microsoft nears the end of its 3,200-job reduction plan, the industry will be watching closely to see if this “reset” finally brings the stability and hit-rate the company has been chasing for over a decade.