Xbox announces more major studio changes

Microsoft has published a new update on its ongoing Xbox restructuring plans, confirming layoffs, studio mergers and several major franchise shifts as the company moves further into its “reset”.

Microsoft says 268 roles are being eliminated across Halo Studios, other first‑party teams and Xbox Game Studios’ central functions. Alongside the layoffs, the company is reorganising its studios to consolidate business units and align teams more closely around key franchises. One of the biggest changes sees Halo moving to Activision, with 343 Industries transitioning into a smaller support group for existing Halo titles.

The update also confirms Obsidian merging with Bethesda, following the studio’s recent return to the Fallout franchise. Obsidian will continue work on Grounded and its new Fallout project in collaboration with Bethesda Game Studios.

Further consolidation is happening within Xbox’s racing teams, with Playground Games and Turn 10 merging into one unified studio overseeing both Forza and Fable.

Microsoft also provided an update on its studio divestitures. Compulsion Games, Double Fine and Undead Labs have all successfully transitioned to independence. Ninja Theory, however, was unable to secure a buyer after two separate agreements fell through, and the studio will now enter consultation on closure. This follows our earlier coverage of Ninja Theory being unable to find a buyer. Consultation with Arkane is still ongoing.

KitGuru Says: Some of these changes make perfect sense, like unifying Obsidian with Bethesda. Others, like moving Halo to Activision, could prove controversial in the long run, but it could also be the best shot in the arm that franchise has had since the Bungie days. 

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