Microsoft restructures Xbox: Halo development moves to Activision, Playground merges with Turn 10

On September 22, 2026, Microsoft announced a sweeping reorganization of its gaming division and the layoff of 268 employees. Xbox Game Studios head Matt Booty said the corporation is changing its management structure: the flagship Halo franchise is being placed under Activision’s control. For players, this means the most serious strategy overhaul in years — the key Xbox series is being taken away from its creator, Halo Studios (formerly 343 Industries), for the first time and entrusted to the makers of Call of Duty.

At the same time, there is no talk of selling the rights or fully shutting down the studio: all brands remain within Microsoft. To create the next major Halo installment, a separate specialized team will be formed within Activision that will not overlap with the Call of Duty developers. Halo Studios itself will keep a compact staff focused exclusively on supporting Halo Infinite, classic releases and the game’s community.

Rare, the studio behind Sea of Thieves, and World’s Edge, which oversees Age of Empires, also come under Activision’s supervision. As The Verge notes, this internal reshuffling of roles turns Activision into Microsoft’s main production and publishing hub for live-service games and shooters.

Bethesda’s RPG alliance with Obsidian and the merger of the Forza teams

The restructuring also affected other key assets. Obsidian Entertainment is moving under Bethesda: the studio will continue to support its own projects on the scale of Grounded while also joining Bethesda Game Studios to co-produce a new game set in the Fallout universe. Mobile publisher King, meanwhile, takes Microsoft Casual Games under its wing.

A structural merger is coming to the racing simulators: Turn 10 Studios and Playground Games are being combined into a single team that will focus on the Forza line and the Fable reboot. According to The Verge, the remaining Turn 10 employees will formally transfer to Playground’s staff, but the future of the hardcore Forza Motorsport branch remains unclear for now.

Staff optimization and the status of troubled teams

The current layoffs of 268 specialists affected Halo Studios staff, central management and Xbox support services. In a message on the official Xbox Wire site, Booty stressed that the restructuring program is about three-quarters complete relative to the initially planned cuts.

At the same time, Microsoft is shedding non-core teams. It previously returned independence to Double Fine and Compulsion Games, handing their leadership their game catalogs and funding. Undead Labs spun off on similar terms: the co-op action game State of Decay 3 will launch day one on Game Pass, but a third-party company will publish it.

Ninja Theory, the studio behind the Hellblade duology, finds itself in the most difficult position. After two attempts to sell the team to outside investors fell through, Microsoft initiated mandatory labor consultations regarding a possible studio closure while continuing to look for alternatives. Similar legal consultations are now underway around Arkane Studios’ European offices — they will last until the end of the year.