Xbox’s big reset has entered another phase, with Microsoft announcing further layoffs and a major reorganization of its first-party studios. The latest changes include Activision taking over development of the next Halo game, Playground Games and Turn 10 combining, and Bethesda expanding its remit. The moves continue the restructuring that Xbox leadership began outlining during its 100-day reset in June.
Xbox’s Reset Consolidates and Restructures Studios
Xbox chief content officer Matt Booty announced today that “we are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer.” He added that changes completed since July, including studio divestitures, had brought Xbox roughly three-quarters of the way through its previously announced restructuring.
The latest changes also reorganize several major franchises under restructured studios. Activision will expand its remit to include World’s Edge and Rare, while a new purpose-built team at Activision will develop the next Halo game. A smaller team at Halo Studios will continue supporting the existing games and community.
Bethesda will take responsibility for Obsidian, which will continue its current projects, including Grounded and a new Fallout project being made with Bethesda Game Studios. King will also absorb Microsoft Casual Games, while Playground Games and Turn 10 will become one studio focused on the Forza and Fable franchises.
The changes follow the more extensive restructuring announced in July, when Xbox said approximately 3,200 roles would be reduced during FY27. At the time, Xbox CEO Asha Sharma described the move as the “most significant restructure in XBOX history” and said the company needed to reset its content portfolio, platform and operations.
Booty also gave an update on previously effected studios as well as clarified the fate of Ninja Theory, who were working on a new Hellblade game:
“Undead Labs has now successfully transitioned on similar terms and, with a new publisher, will release State of Decay 3 day one on Game Pass. Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward.”
What Does the Xbox Reset Mean for Its Games?
The latest restructuring builds on the strategy Xbox laid out during its first 100 days under Sharma. In June, Sharma and Booty said Xbox had become “over-extended” after expanding its studio system and argued that the company needed to reassess its investment priorities. They also said Xbox had spent more than $20 billion on content, platform, and hardware subsidies over five years, excluding Activision Blizzard King, while annual revenue had declined by almost $500 million.
Xbox has previously said exclusivity decisions would be made on a case-by-case basis, with Gears of War: E-Day being one of the clearest examples of the reset taking shape. Xbox had identified E-Day and Clockwork Revolution as upcoming console exclusives, with the company saying players could expect signature exclusives each year. E-Day subsequently went gold on Sept. 17 ahead of its Oct. 6 release on Xbox Series X/S and PC.
Today’s announcement therefore represents another step in a restructuring that began with the 100-day reset and continued through July’s layoffs and studio changes. With 268 more roles eliminated and several major franchises moving under different leadership structures, Xbox’s stated goal of becoming a smaller and more focused operation is continuing to take shape.
