Xbox Restructuring “Phase 2” Cuts 268 Employees | Next Halo Developed by Activision, Ninja Theory Enters Closure Talks [September 2026]

日本語版を読む →

Xbox’s “reset” has gone one step deeper. Microsoft announced on September 22, 2026 (local time) a total of 268 employee cuts across Halo Studios and other subsidiaries, as well as the administrative departments of Xbox Game Studios (XGS). This marks the “phase 2” of the 3,200-person restructuring announced in July, with roughly three-quarters of the overall plan now complete.

What’s heavier than the numbers themselves is the wholesale transformation of the organization’s inner workings. The next Halo won’t be developed by Halo Studios—instead, a dedicated new team being created within Activision will handle development. Rare and World’s Edge are also moving under Activision, Obsidian is going to Bethesda, and Playground Games and Turn 10 are merging. And Ninja Theory, behind Hellblade, is entering into “employee negotiations with closure as a precondition” after two failed sales negotiations.

The announcement comes from Xbox’s EVP and Chief Content Officer, Matt Booty. An internal memo titled “Continuing Our Reset” has been published in full on Xbox Wire, and Famitsu reported it the same day. In this article, we organize the details of the cuts, the destinations of each studio, and the flow from phase 1 all based on primary sources.

Hearing about Halo Studios’ downsizing, as someone who was looking forward to July’s Halo: Campaign Evolved, I’ll be honest—my heart aches a bit. But setting aside the sentimentality for now, let’s start by confirming the facts.

You can find details about what phase 1 entailed in a previous article. This time, please read it as a continuation of that report.

What’s the Scope of Xbox’s Phase 2 Restructuring? 268 Cuts and the Meaning of “Three-Quarters Complete”

This round of cuts affects 268 people, targeting Halo Studios, other first-party studios, and XGS administrative and central function departments. In his memo, Booty explicitly states: “The measures completed since July, including studio sales, reach approximately three-quarters of the restructuring we announced earlier.” Having set an initial target of 1,600 cuts on July 1, with the same number targeted over the following year, this phase 2 represents essentially the final stretch of that second half.

The key point is that the “three-quarters” figure includes the headcount of sold-off and newly independent studios. Compulsion and Double Fine achieved independence in August, and Undead Labs also completed its transition to independent studio status. In other words, the number of people coming off Microsoft’s payroll has been bundled into this count—it’s not just pure layoffs adding up to 3,200.

That said, roughly one-quarter remains, which by simple math means another 800 or so cuts are still planned. As of September 24, 2026, the timing of the next round hasn’t been announced, but the memo’s closing section indicates a town hall (all-hands meeting) is planned for October 6. If there’s a next move, it’ll likely be before or after that.

Who’s Making Next Halo? A Dedicated Activision Team Handles Development, Halo Studios Downsizes

The next Halo will be developed by Activision. However, it’s not like Call of Duty’s team spinning it out in their spare time—the memo explains that a “dedicated new team built specifically for this purpose,” separate from CoD’s current development and future roadmap, will take the lead. Halo Studios will retain a small group focused on supporting existing titles and community engagement.

This is the first time in the series’ history that Halo Studios (formerly 343 Industries) is stepping away from developing a mainline Halo title. Since inheriting the franchise from Bungie, the studio has carried the series for over a decade—from Halo 4 through July’s Halo: Campaign Evolved. The 268 cuts in this phase hit Halo Studios hardest, according to international outlets. While Campaign Evolved and Halo Infinite operations won’t stop immediately (remaining teams will handle them), the pace of updates could slow significantly. As of September 24, 2026, the next Halo’s title, release window, and target platforms remain unannounced.

On the positive side: Activision’s development muscle—which has been pumping out yearly Call of Duty releases—is now focusing on Halo. Considering Infinite’s delays and chronic content shortages, a “complete organizational overhaul” is understandable. But handing the franchise narrative to the CoD company does complicate longtime fans’ feelings about it.

What Does the Full Studio Restructuring Look Like? Where Rare, World’s Edge, Obsidian, and Playground + Turn 10 Are Headed

Under this restructuring, Xbox’s first-party operations are being reorganized into three major umbrellas: “Activision,” “Bethesda,” and “King.” The intermediate management layer (XGS) is being trimmed, with decision-making pushed directly down to profitable publisher organizations. Here’s a table breaking down each studio’s new home:

Rob Costitch, Activision’s Chief Content Officer, commented: “I’m delighted to welcome Halo, Rare, and World’s Edge to Activision.” The idea of Call of Duty’s company now housing Halo, Sea of Thieves, and Age of Empires would’ve shocked nobody when the acquisitions were complete. We’re witnessing a reverse takeover—the acquired side absorbing the acquiring side’s organizational structure.

Obsidian going to Bethesda makes sense. The studio behind Fallout: New Vegas is working with Bethesda Game Studios on a new Fallout project—that’s easily the only bright news in this memo. Grounded also continues. The Playground and Turn 10 merger means Forza Horizon and Forza Motorsport now sit under one roof, but as of September 24, 2026, there’s been no official word on how Fable development is affected.

What Happens to Ninja Theory? Failed Sales Talks Lead to Closure Negotiations; Arkane Continues Through Year-End

Ninja Theory is entering into “employee negotiations with closure as a precondition.” According to the memo, since being flagged for sale in phase 1 in July, two separate sale agreements came close but ultimately fell through. Microsoft is exploring “other paths forward” while simultaneously launching closure negotiations grounded in UK employment law.

It’s heavy: the Cambridge studio behind Hellblade: Senua’s Sacrifice and Senua’s Saga: Hellblade II failed to find a buyer twice. The reasons for the failed sales haven’t been made public, but it stands to reason that a high-cost studio pushing the cutting edge of Unreal Engine 5, with Game Pass as its sole revenue model, couldn’t find independent backers. When closure is formally decided, the handling of the Hellblade IP as of September 24, 2026 remains unannounced.

Arkane Studios (Lyon) will continue employee negotiations through year-end, the memo states. As of July, it was listed as “negotiations in progress” regarding compensation, and later reports emerged that Microsoft was exploring potential buyers. Unlike Ninja Theory’s trajectory toward closure, we’re hoping Arkane avoids that fate, but conclusions won’t come until after the year-end.

Our focus today should be on supporting those affected and treating one another with care and respect.

Citation Source: Xbox Wire

The memo’s closing mirrors July’s comments from Activision CEO Asha Chaudhry almost exactly. The words sound sincere on their surface, but put yourself in Ninja Theory’s shoes: two and a half months after being told “seek alternative survival,” they’re being handed closure talks instead. What current and former retail workers will tell you is that what the floor needs most in moments like these isn’t “care and respect”—it’s concrete information.

What’s Happened from Phase 1 (July) Through Phase 2 (September)? A Timeline

This phase 2 follows up on items listed as “under negotiation” and “pending sale” in July’s phase 1, with successive answers rolling out. Lined up side-by-side, the two announcements reveal where Xbox is heading.

Where phase 1 was about “headcount and red ink,” phase 2 is about “rewriting the organizational chart.” Landing 1 dollar at a 64 cent loss in July, this phase 2 restructuring—eliminating the XGS intermediate layer and connecting Activision, Bethesda, and King directly to profitable publisher organizations—represents the administrative spine of what CEO Satya Nadella laid out in April’s “We Are Xbox.”

The silver lining is that in-development titles haven’t stopped. State of Decay 3’s day-one Game Pass launch, Grounded’s continuation, Fallout’s new project, and Forza and Fable sequels are all confirmed. The concern is what remains of that last quarter: other cuts finished, and what does that lineup look like when creative studios like Ninja Theory and Arkane are being picked off one by one? Honestly, we’d rather Xbox stay a “factory for games we want to play”—not a “factory for IP that sells,” nothing else. Before the October 6 town hall potentially brings the next wave, we’re keeping watch.

Summary: Xbox Phase 2 Cuts 268, Next Halo Goes to Activision, Ninja Theory Enters Closure Talks

On September 22, 2026, Xbox announced 268 employee cuts as phase 2 of its restructuring. Halo Studios and other first-party studios, along with XGS administrative departments, are the targets, with roughly three-quarters of the 3,200-person restructuring from July now complete. The next Halo will be developed by a dedicated new team within Activision, with Halo Studios downsizing to focus on supporting existing titles.

Rare and World’s Edge move under Activision, Obsidian moves to Bethesda, Playground and Turn 10 merge into one studio, and Microsoft Casual Games transitions to King. Ninja Theory enters closure negotiations after two failed sales talks, while Arkane continues negotiations through year-end. As of September 24, 2026, the next Halo’s release window, platforms, and Ninja Theory’s final status remain unannounced.

The next milestone is October 6’s town hall. Will the remaining quarter of cuts be announced then? And will Arkane’s and Ninja Theory’s futures come into focus? We’ll be tracking developments as they unfold in this ongoing article series.