Xbox Reshuffles Studios: Halo Moves to Activision, Obsidian to Bethesda

Microsoft has announced a sweeping internal reorganization of its Xbox game studios, moving some of its biggest franchises under new leadership and cutting 268 more jobs. The changes, announced on September 22, are the latest stage of what Xbox has called a "reset" for its gaming business.

Halo moves to Activision

The most visible change affects Halo. The franchise will now sit under Activision, the Call of Duty publisher Microsoft acquired as part of its 2023 Activision Blizzard purchase. Halo Studios, formerly 343 Industries and the recent developer of Halo: Campaign Evolved, will stay on as a "small team" supporting the player community, while the remaining staffing roles are eliminated as part of the 268 newly announced layoffs.

"For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy," Activision president Rob Kostich said in a statement provided to Kotaku, adding that the company has already begun assembling a purpose-built team.

Activision also takes control of Rare (Sea of Thieves) and World's Edge, the studio behind Age of Empires.

Obsidian joins Bethesda as studios merge

Obsidian Entertainment, the studio behind Fallout: New Vegas, Avowed and The Outer Worlds, becomes part of Bethesda, where it will continue work on a new Grounded game and a "new Fallout project made in collaboration with Bethesda Game Studios."

Microsoft Casual Games, which still publishes Solitaire and Minesweeper, will now report to King, the Candy Crush studio. Playground Games (Fable, Forza Horizon) and Turn 10 (Forza Motorsport) are being merged into a single team.

Sales, spin-offs and a shrinking payroll

Xbox says it is still looking for a buyer for Ninja Theory (Hellblade) and Arkane Studios (Dishonored, Prey). It has already divested Compulsion, Undead Labs and Double Fine; the latter bought itself out to become independent again, as it was before Microsoft acquired it in 2019.

The company says it is now "roughly three-quarters of the way" through the 3,200 layoffs announced earlier this summer.

Why it matters

Microsoft frames the reorganization as a way to "strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise." Consolidation is also meant to cut management layers: in July, Xbox CEO Asha Sharma said some work passed through "as many as 14 layers of management," slowing decisions and blurring accountability. The restructuring extends that logic across the studios themselves.