Invest1 publisher3 min readPublished
Xbox counts divested studios toward the 3,200 roles it plans to cut
Activision picks up Halo, Rare and World's Edge as this week's 268 eliminations take Microsoft's Xbox reset about three-quarters of the way through, a total that Matt Booty's memo counts the sold studios inside.
The Investor · Invest desk
What happened
- Xbox eliminated 268 roles this week across Halo Studios, other first-party studios and the XGS management and central functions layer, chief content officer Matt Booty told staff in a Tuesday memo.
- Two separate agreements to sell Ninja Theory fell through, and Xbox is now discussing a proposed closure with the studio's employees while exploring other paths.
- Booty said the actions completed since July, including the studio divestitures, bring the restructure roughly three-quarters of the way through the plan announced by Xbox CEO Asha Sharma.
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Why it matters
- constraint Because transferred staff count toward the 3,200, Microsoft can reach a 20 percent reduction while some of those people keep working on the same games for other employers, so the target measures Microsoft's payroll and not the number of jobs ended.
- exposure Ninja Theory's employees are now in consultation over closure after two sale agreements failed, which leaves their outcome to a process Microsoft describes as still exploring other paths.
- decision Microsoft is not rebuilding a full Halo development organisation at Halo Studios; the team for the next game is being assembled at Activision, and Halo Studios keeps a live-games role.
- precedent With five studios ceasing to be standalone, Xbox greenlights now route through fewer publishing hubs, and the disposal track opened with Compulsion and Double Fine remains available for units that do not fit one.
Asha Sharma's July figure, up to 3,200 roles or 20 percent of staff, implies a division of roughly 16,000 people [13][1]. Booty wrote that the actions completed since July, "inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring" [14]. Three-quarters of 3,200 is about 2,400, leaving about 800 [2]. This week's 268 is 8.4 percent of the target, and about a third of what is left [3][5].
Much of the reduction so far comes from disposals rather than redundancy notices. An employee who moved out with Compulsion or Double Fine in July [9], or with Undead Labs, which is now partnering with a new publisher to release State of Decay 3 day one on Game Pass [10], counts against the 3,200 all the same [13]. The payroll falls and the games keep shipping under other publishers [10].
Two separate agreements for Ninja Theory "fell through", Booty wrote, and Xbox is now talking to the studio's employees about a "proposed closure while continuing to explore other paths forward" [11]. Two processes that reached agreement and then failed suggest the gap between what a buyer would pay and what Microsoft would accept did not close. Consultation with the French studio Arkane runs through the end of the year, according to Xbox [12].
"We're thrilled to welcome Halo, Rare and World's Edge to Activision. It's an honor and a responsibility that we do not take lightly," Activision president Rob Kostich said [15]. The staffing term is the part with money attached. The next Halo goes to "a new, purpose-built team that is separate from ongoing development and plans for Call of Duty," while "a small team at Halo Studios will continue supporting the Halo community and games in-market," Booty wrote [5]. Kostich said Activision has "already begun assembling a purpose-built team, unique in capability and talent" [16]. Halo Studios, meanwhile, absorbed part of the 268 this week [2].
Five studios stop being standalone units. World's Edge and Rare move under Activision [4], Obsidian goes under Bethesda while keeping Grounded and the new Fallout project [6], Microsoft Casual Games folds into King [7], and Playground and Turn 10 merge into a single studio for Forza and Fable [8][4]. Booty's stated goal is to "strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise" [3]. This is Microsoft's plan for Microsoft's studios; a read across the rest of the console business would need evidence from somewhere else.
The memo supports more than one interpretation. Booty describes the consolidation as franchise strengthening [3]. It could also be cost reduction with a franchise label, in which case the remaining 800 roles come out of the merged units [2]. A third possibility is that the tidying prepares more units for sale, the route Compulsion and Double Fine took in July [9]. I would weight the second and third: disposal has been the cheaper instrument so far, and by Booty's own count a quarter of the restructure is still ahead [14][2].
What to watch
- Whether the Arkane consultation ends in a sale, a closure or retention by the end of the year.