Microsoft is making substantial changes to its Xbox business, including assigning Activision to develop the next mainline entry in the Halo series. This move follows a period of reevaluation for the franchise, which has seen its developer, 343 Industries (recently rebranded as Halo Studios), undergo significant restructuring.
Xbox chief content officer Matt Booty confirmed that a new, dedicated team is being assembled within Activision to handle the development of the upcoming Halo game. While specifics about the game's direction remain undisclosed, The Hollywood Reporter indicated it will be a "full-feature, mainline installment." Activision boss Rob Kostich expressed ambition, stating the company aims to create "the greatest Halo game ever" that honors the series' legacy while appealing to its existing fanbase. This development is separate from Activision's ongoing Call of Duty projects.
The early stage of development, marked by the assembly of a new team, suggests the game is likely years away from release. This aligns with Xbox's past practices of announcing projects far in advance, such as StarCraft's new shooter slated for 2030 or The Elder Scrolls 6, revealed in 2018.
Meanwhile, Halo Studios is being significantly scaled back. A small team will remain to support existing Halo titles and the community. Many staff members have been let go, including those involved in esports and cinematics. This marks a sharp departure from October 2024, when Halo Studios announced plans for multiple new games and a shift to the Unreal Engine. It is probable that previously in-development projects at Halo Studios, such as a live-service game akin to Fortnite and remakes of Halo 2 and Halo 3, have been canceled.
Xbox CEO Asha Sharma reiterated Halo's importance to the company, emphasizing a long-term strategy for its revival. However, not all industry figures share optimism about Halo's resurgence. Marcus Lehto, a co-creator of Halo and the designer of Master Chief, previously estimated that a fully realized new Halo game could cost between $600 and $800 million and take over four years to produce. Lehto also suggested that large corporations can be inefficient, favoring smaller, agile teams for such ambitious projects. He described the news of Activision's involvement as "shocked but not entirely surprised."
The broader Xbox layoffs, affecting studios like The Coalition (Gears of War), underscore a strategic refocusing. Sharma indicated that these changes are part of a plan to concentrate on higher-priority franchises, including Halo, Fallout, The Elder Scrolls, Call of Duty, Minecraft, Fable, and Forza, after an earlier strategy of developing a broader content portfolio did not yield expected growth.