Microsoft cuts 268 Xbox jobs and hands Halo to Activision

Microsoft's Xbox video game unit is cutting 268 jobs and consolidating several studios under Activision, according to a memo sent to employees by Xbox Chief Content Officer Matt Booty on 22 September 2026. Activision, which Microsoft acquired for $69 billion in 2023, will lead the development of the next Halo title. It will also supervise studio Rare and Age of Empires maker World's Edge.

Microsoft's Halo Studios will continue to manage current Halo titles, although its staff will be affected by the cuts. Meanwhile, Bethesda will absorb Obsidian, which will continue work on Grounded as well as a new Fallout project.

The restructuring follows Microsoft's announcement in July to eliminate 3,200 jobs over the next year, representing a 20% reduction in Xbox headcount. Xbox has now completed three-quarters of those planned broader cuts, according to Booty's memo. At the time of the July announcement, Xbox CEO Asha Sharma explained to staff that the unit was operating with profit margins three to ten times lower than comparable businesses.