Xbox Transforms Halo and Rare with Major Shift to Activision

Five months after a significant workforce reduction of 1,600 employees, Xbox is moving forward with further consolidation. Matt Booty, Xbox’s chief content officer, announced on Tuesday that an additional 268 employees across various departments will be laid off, alongside a reorganization of several first-party studios.

This restructuring will affect four key franchises: Halo, Fallout, Forza, and Fable.

In a recent blog update, Booty revealed that the next installment in the Halo series will be developed by Activision. A new team will take the lead on the project, while a smaller group at Halo Studios will remain to support the franchise. Booty also confirmed that Activision will continue to manage the Call of Duty series.

Rare, the studio behind Sea of Thieves, will also be joining Activision.

Obsidian, renowned for Fallout: New Vegas, will now operate under Bethesda’s umbrella. Microsoft assured that Obsidian’s ongoing projects, including the upcoming Fallout title, will proceed as planned. Reports indicate that the new Fallout game will be directed by Josh Sawyer, who led New Vegas. Meanwhile, Bethesda is still focused on The Elder Scrolls 6 but has already begun pre-production on Fallout 5, expected to launch in 2026.

Playground Games and Turn 10 will merge into a single studio dedicated to Forza and Fable. The blog post also mentioned that King will broaden its scope to include Microsoft Casual Games, bringing together two leaders in casual game design and live operations.

Many of these changes are formalizing collaborations that were already taking place behind the scenes. For instance, Obsidian has been working closely with Bethesda on its Fallout project.

Earlier this summer, Xbox divested from several internal studios, including Compulsion Games, Undead Labs, and Double Fine. While these studios retained their intellectual properties and back catalogs, Xbox recently announced that it could not reach an agreement with Ninja Theory, the studio behind Devil May Cry. Arkane, known for the Dishonored series, is still negotiating its arrangement with Xbox.

Xbox plans to hold a town hall meeting with its remaining employees and studios soon to “reflect on our progress and look ahead to one of the strongest game lineups in our history.”