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Microsoft reassigns Halo's next flagship from Halo Studios to Activision
Halo Studios keeps Halo Infinite and Campaign Evolved in market while a new team inside Activision builds the next flagship, and the same reorganisation moves Rare's Sea of Thieves developers and World's Edge under Activision.
The Product Desk · Product desk
What happened
- Microsoft is eliminating 268 roles across Halo Studios, other first-party studios and the Xbox Game Studios management and central functions layer, according to an internal memo from Matt Booty.
- Turn 10 Studios and Playground Games are merging into a single studio focused on the future of Forza Horizon and Fable.
- The cuts follow layoffs of 1,600 Xbox employees earlier this year and a round of studio sales, against a total of 3,200 roles Microsoft says will be affected by June 2027.
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Why it matters
- constraint A studio funded only to support games in market cannot offer a senior developer work on the next release, so franchise pedigree stops functioning as a retention argument at Halo Studios.
- decision Any lead holding a live-service title inside a large publisher now has to establish which org is funded for the next version, because building the current one no longer settles it.
- exposure Rare and World's Edge sit under Activision from here. The Verge could not establish whether either lost staff in this round, so where they stand in the cuts still to come is an open question.
- precedent Consolidating business units is now a sufficient reason to move a flagship between labels at Microsoft. That sets the terms for whichever franchise comes up in the next tranche.
Matt Booty's memo splits the franchise in two. "Activision will also be developing the next Halo title, led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty," wrote Booty, Xbox's chief content officer [3][2]. "A small team at Halo Studios will continue supporting the Halo community and games in-market" [4]. The studio formerly called 343 Industries keeps Halo Infinite and Halo: Campaign Evolved [5][6].
Rare and World's Edge move with their games. Activision's remit expands to World's Edge, which makes Age of Empires, and to Rare, whose UK developers bring Sea of Thieves across [7][8][9]. Halo is the one case here where the game and the people who built it were separated. Activision president Rob Kostich said of the replacement: "We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community" [12][13].
Add the 268 roles to the 1,600 Xbox layoffs earlier this year and Microsoft has announced 1,868 of the 3,200 cuts it said would land by the end of its 2027 financial year, in June 2027 [1][14][15][1]. That is 58 percent of the role count, and about 1,332 still to come; The Verge puts the remainder at more than 1,000 [3][2][16]. Microsoft says the actions completed since July, including the studio sales, bring it "roughly three-quarters of the way through previously announced restructuring" [17]. Some of that three-quarters is the studio sales, not headcount.
The stated aim is organisational: "operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise" [18]. The rationale is about business units; the player never comes up. The same reasoning moves the casual games unit behind Solitaire, Mahjong and Minesweeper from Bethesda to King [24]. Obsidian goes to Bethesda to work on a new Fallout title, and Turn 10 merges with Playground Games around Forza Horizon and Fable [22][23].
Microsoft moved Halo development to Unreal Engine 5 less than two years ago [19]. Craig Duncan, who ran Rare, became head of Xbox Game Studios in 2024 and resigned in June, before the reset [20]. Louise O'Connor, the division's chief of staff, left with him, having started at Rare in 1999 [21].
For anyone who owns a product inside a larger publishing org, the lines that matter for each title are who is funded to build the next major version and who is funded to keep the shipped one running. Each line has a team name on it. When the first name is not yours, you run a support organisation, whatever your title says, and the roadmap you present internally is someone else's.
Teams tell themselves that people stay for the franchise. What the memo offers a Halo Studios engineer who wants to work on the next Halo is a job application to a team being assembled inside Activision [12].
What to watch
- Whether the roughly 1,332 unannounced cuts land on Rare or World's Edge now that both report into Activision.
- Ninja Theory's status: The Verge reports Microsoft is likely closing the studio, and Microsoft has not confirmed it.
- Job postings for Activision's purpose-built Halo team, which would show whether it hires out of Halo Studios or around it.