Xbox Handed Halo to the Call of Duty Publisher and Cut 268 More Jobs. I Get the Logic. I Still Hate How It Feels

Here's the line that stuck with me from Tuesday: the studio that spent its entire life making Halo is not going to make the next Halo. On September 22, Xbox announced another 268 layoffs, and in the same post it handed the franchise to Activision, the company behind Call of Duty. Xbox didn't call it a demotion, and I didn't expect it to. But I've been through the memo, what the people who built Halo are saying and what the analysts actually think, and I keep ending up in the same uncomfortable spot. The logic mostly holds up. I still don't like how it feels. What follows is what happened, who runs what now, and where I think the real danger sits, which isn't where most of the headlines are pointing.

What Xbox actually announced

The news came through an Xbox Wire post called "Continuing Our Reset," written by Booty. It makes three points. First, 268 roles are gone across Halo Studios, other first-party studios and the management layer above them. Second, Xbox is reorganizing studios into fewer business units. Third, it updates the studios it is trying to move out of the company. Booty says the work done since July, including those divestitures, puts Xbox roughly three-quarters of the way through the plan announced earlier this year.

That plan started on July 6, when CEO Asha Sharma called it the most significant restructure in Xbox history, cut 1,600 jobs that day and said about 3,200 would go over fiscal year 2027. She also said Xbox needed to reset, and cited a business that wasn't healthy, including a 5% year-over-year revenue decline and a Game Pass subscriber base far below internal targets. In the same memo she wrote that Xbox isn't the best home for every kind of studio, and that in a typical year it lost 64 cents for every dollar it invested.

Who runs what now

Everything in this week's announcement is easier to follow in one place, so I built this table myself from the memo and the reporting around it. On a phone, each row stacks into a small card, so there's nothing to scroll sideways.

Look down the "Now" column and a pattern jumps out: Xbox is sorting its studios by what kind of games they make. Activision leads shooters, Bethesda leads role-playing games, King leads casual, and the merged Playground and Turn 10 team leads racing. It's tidy. It's also the opposite of the hands-off approach Xbox leadership used to brag about.

Why Halo hit differently

Most of the reshuffling is corporate plumbing. Halo is not. Halo Studios, which was 343 Industries until it rebranded in 2024, was created to carry the series after Bungie finished with Halo: Reach in 2010. Its most recent work, Halo: Campaign Evolved, launched July 28 on Xbox, PC and, for the first time in the franchise's history, PlayStation 5. Critics were warm but not wild. It sits at 80 on Metacritic's PS5 page, a solid score but a long way from the 97 the original earned. One analyst at Alinea Analytics told Kotaku it landed respectably but nowhere near what Halo used to mean, partly because it has no online multiplayer.

Then came the human side. Longtime Halo boss Bonnie Ross said on LinkedIn that hundreds of team members were being affected and that the studio had essentially been shut down. Kiki Wolfkill, a former Halo executive producer, said she was gutted. Marcus Lehto, a co-creator of the original Halo, said he was shocked but not entirely surprised. And a former senior PR manager described what remains as a shell, there to keep the servers on. Kotaku also reported that at least one Halo developer was promoted the day before being laid off. I can't read that detail without wincing. Activision's side, from president Rob Kostich, is that the goal is to "make the greatest Halo game ever," and that a purpose-built team is already being assembled.

The part I actually agree with

I don't want to write a piece that only mourns, because the case for this move is better than the internet is giving it credit for. Newzoo's data, shared with Kotaku, shows that players of Obsidian's Avowed and The Outer Worlds 2 were more than three times as likely as average to also play Bethesda's Starfield or Oblivion Remastered. Yet Avowed and Oblivion Remastered launched just two months apart in 2025. When one company owns both, someone can finally say "not this month." Ubisoft regrouped into genre-based creative houses in January, and EA put Battlefield studios under one banner in 2025. Xbox is following a trend, not inventing one.

There's an interesting Halo-specific argument too. Newzoo says shooters' share of PC and console playtime fell from 39.6% to 34.8% in 2025, which puts pressure on an annual Call of Duty. Fewer than 3% of Call of Duty players also played Halo Infinite, so the two audiences barely overlap. Halo's last two mainline games came six years apart. One analyst floated the idea that Halo and Call of Duty could alternate years. That's speculation, not an announcement, but it's the optimistic version of this story, and I think it's plausible.

The part I can't shake: Ninja Theory

Here's where my enthusiasm drops. In July, Sharma said Ninja Theory and Undead Labs had entered terms to join new owners with funding to finish Senua and State of Decay 3. This week, Booty said two separate agreements for Ninja Theory fell through, and Xbox has begun a formal consultation about closing the studio, even as it says it's still exploring alternatives. It's worth noting that one earlier report claimed Xbox planned to part with Ninja Theory before showing Senua at its June showcase. Xbox hasn't confirmed that, so I'm treating it as a claim, not a fact.

Undead Labs shows how differently this can go. Kotaku reports its deal with UK developer Splash Damage also fell apart, but the staff found a way to take control themselves. The studio says it is now free of Microsoft and employee-owned, though it had to lay off a significant number of people in the process. Analyst Joost van Dreunen called the Ninja Theory situation the most troubling item of the bunch, because two collapsed sales suggest Xbox bought talent that's hard to sell and expensive to keep. He also called the whole restructuring a "reverse acquisition in slow motion," with the publishers Xbox bought now absorbing the studios it built. That line has stayed with me, because Xbox paid roughly $69 billion for Activision three years ago, and this week is the clearest sign yet of who ended up in charge.

My reset report card

Since I've been walking through this move by move, I decided to grade them. These are my own grades, not a consensus, and I'd happily be argued out of any of them.

1. A−

   Playground and Turn 10 becoming one studio

   Xbox itself says these two have been creative partners on Forza for more than a decade. Making it official is the least controversial move in the whole memo, and probably the smartest.

2. B+

   Microsoft Casual Games moving under King

   Nobody is losing sleep over Solitaire. Putting the casual business under the team that already runs Candy Crush at scale is boring, and boring is exactly what you want here.

3. B

   Obsidian moving under Bethesda

   The memo and Bethesda's president both say Obsidian's leaders stay in charge. My only worry is the phrase franchise-led model, because Obsidian's best work has never been franchise work.

4. C+

   Halo going to Activision

   Activision ships on schedule, and Halo hasn't. That's a real argument. But a purpose-built team that doesn't exist yet is a promise, not a plan, so this grade stays provisional until we see it.

5. D

   Rare and World's Edge going to Activision

   Even the analyst who defends the genre logic says this is the one move it doesn't explain. Sea of Thieves and Age of Empires have nothing in common with a shooter publisher.

6. F

   How Ninja Theory has been handled

   Two buyers fell through, and now the studio behind Hellblade is in a closure consultation while its next game was announced for 2027. Whatever the spreadsheet says, this is the ugliest part of the reset.

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