Microsoft's Xbox division eliminated 268 positions across Halo Studios, other first-party teams, and the Xbox Game Studios management layer on September 22, as detailed in an internal memo from Chief Content Officer Matt Booty published on Xbox Wire. The cuts represent the latest step in a broader restructuring plan targeting 3,200 roles over the fiscal year ending June 2027, with roughly three-quarters of that target now complete following July's initial wave of 1,600 layoffs.

Activision, the Call of Duty publisher acquired by Microsoft in 2023, assumes oversight of Rare, World’s Edge, and development of the next mainline Halo title via a new purpose-built team operating separately from ongoing Call of Duty work. A reduced skeleton crew remains at Halo Studios solely to support existing titles and the community. Bethesda gains Obsidian, King absorbs Microsoft Casual Games, and Playground Games merges with Turn 10 into a single Forza and Fable-focused unit. Two attempted divestitures of Ninja Theory collapsed, triggering consultations on a proposed studio closure while Arkane Lyon discussions continue.

Booty framed the moves as necessary to reduce business units, align related groups, and concentrate publishing expertise amid ongoing cost pressures, including hardware component expenses that have more than doubled in recent periods. A union statement from the Communications Workers of America described the layoffs as prioritizing profits over the workers behind the platform's games. Community reaction on X included pointed commentary on leadership accountability at affected studios and speculation about remaining headcount at Halo Studios.