Microsoft is continuing its major Xbox restructuring, with another 268 roles being eliminated across Xbox’s first-party studios, Halo Studios, and its central management and support functions.
The latest changes were announced by Xbox executive Matt Booty in a September 22 message to employees titled “Continuing Our Reset.” Booty said the changes are part of the broader Xbox reset announced earlier this year and that the restructuring is now roughly three-quarters complete.
The announcement also brings significant changes to how several Xbox studios and franchises will be organized.
Activision is taking over the next Halo game
One of the biggest changes involves Halo.
Activision will expand its responsibilities to include World’s Edge and Rare, while also taking responsibility for development of the next Halo title.
Xbox says a new, purpose-built team at Activision will lead development of the next Halo game. The team will operate separately from the groups working on Call of Duty and ongoing development.
Meanwhile, a smaller team at Halo Studios will remain in place to support the existing Halo community and games already on the market.
The move represents a significant organizational change for one of Xbox’s most recognizable franchises.
Bethesda and Obsidian will operate under a larger group
Xbox is also changing the structure around Bethesda.
Bethesda will expand its remit to include Obsidian, while Obsidian will continue working on its current projects. That includes Grounded as well as a new Fallout project being developed in collaboration with Bethesda Game Studios.
The goal, according to Xbox, is to operate fewer business units and bring groups that already work closely together under a more streamlined structure.
Playground and Turn 10 are becoming one studio
Another notable change involves the teams behind Forza and Fable.
Playground Games and Turn 10 will come together as a single studio focused on the two franchises.
Xbox says the studios have worked as creative and franchise partners for more than a decade, and the latest restructuring will formally bring their work into one team.
For players, the move could mean a more centralized development structure around two of Microsoft’s major racing and RPG franchises, although Xbox has not provided additional details about how individual projects will change.
King will take on Microsoft Casual Games
King, Microsoft’s mobile gaming business, will also expand its responsibilities.
The company will take over the Microsoft Casual Games group, bringing together two organizations that Xbox describes as leaders in casual game design and live operations.
The change is part of Microsoft’s broader effort to consolidate its gaming operations into fewer business units.
More studio divestitures are taking shape
Xbox also provided an update on several studios that have been moving outside Microsoft’s ownership structure.
Compulsion Games and Double Fine returned to independent management in August, along with their intellectual property, back catalogs and funding runway.
Xbox says Undead Labs has now completed a similar transition. Under a new publisher, the studio is still expected to release State of Decay 3 on Game Pass on day one.
The situation is less certain for Ninja Theory. Xbox said two separate agreements for the studio fell through and that it will now begin consultations with employees regarding a proposed closure, while continuing to explore other options.
Consultations involving Arkane are also continuing and are expected to run through the end of 2026.
Xbox says the reset is not finished yet
The latest announcement makes it clear that Microsoft’s Xbox restructuring is still underway.
Booty said the changes completed since July, including the studio divestitures, have brought Xbox approximately three-quarters of the way through its previously announced restructuring.
For Xbox employees and studios, that means more organizational changes could still follow as Microsoft works toward the next stage of its gaming strategy.
The company plans to hold an ALL-XBOX town hall on October 6, where employees will reflect on the restructuring and look ahead to what Xbox describes as one of the strongest game lineups in its history.
A major shift for Xbox’s first-party strategy
The latest reset goes beyond another round of job reductions. Microsoft is reshaping the structure behind some of its biggest gaming franchises, moving studios into larger groups and changing who is responsible for major series such as Halo, Forza, Fable and Fallout.
For players, the immediate impact may not be obvious, particularly for games already deep into development. But the organizational changes could shape how Microsoft’s first-party studios and franchises are managed in the years ahead.
With the restructuring still underway, Microsoft’s October town hall could provide a clearer picture of where the Xbox strategy is heading next.
