Microsoft has confirmed that Activision, the developer behind the Call of Duty series, will take on the development of the next mainline Halo game. This move comes as part of a substantial restructuring of Xbox's first-party studios, which has resulted in significant layoffs, particularly at Halo Studios.
Xbox announced 268 layoffs today, impacting "Halo Studios, other first-party studios, and the XGS management and central functions layer." This action is part of ongoing cuts initiated in July, according to Xbox boss Asha Sharma's "reset" of Microsoft's gaming division. These recent layoffs follow an earlier wave that saw 1,600 staff lose their jobs, with Microsoft having previously stated that an additional 1,600 employees would be let go within the current fiscal year.
Matt Booty, Xbox Chief Content Officer, stated in a blog post that the recent actions bring the company "roughly three-quarters of the way through previously announced restructuring." He expressed gratitude for the contributions of departing colleagues and acknowledged the difficulty of the day for those affected.
With Halo Studios undergoing significant changes, the responsibility for the Halo franchise now shifts to Activision. Booty confirmed that Activision will lead development on "the next Halo title" with a newly formed team, separate from ongoing Call of Duty projects. A smaller contingent at Halo Studios will continue to provide support for the existing Halo community and games.
Details regarding the release date of the next Halo game or Activision's specific plans for the franchise, such as a potential reboot or integration into its annual release schedule, have not yet been disclosed. Activision has maintained a consistent annual release cadence for Call of Duty for two decades.
The transfer of Halo to Activision follows a period of mixed reception for the franchise under Xbox's ownership. Microsoft acquired Halo when it purchased Bungie in 2000. Bungie later became independent in 2007 and partnered with Activision for its Destiny series. Microsoft established 343 Industries to manage Halo, releasing Halo 4 in 2012, followed by Halo 5: Guardians in 2015 and the delayed Halo Infinite in 2021. The recent remake of the original Halo, titled Halo: Campaign Evolved, also encountered development issues.
In 2024, 343 Industries rebranded as Halo Studios and announced plans for multiple new Halo games using Unreal Engine, showcasing a tech demo based on Project Foundry. The future of this work under Activision remains uncertain.
In addition to Halo, Xbox is placing Age of Empires developer World's Edge and Sea of Thieves developer Rare under Activision's purview. Rob Kostich, president of Activision, stated his enthusiasm for welcoming these studios and games, emphasizing a commitment to creating a Halo game that honors the franchise's legacy while appealing to its fanbase. He confirmed that a dedicated team is being assembled for this endeavor.
Elsewhere in the restructuring, Obsidian, known for Grounded and The Outer Worlds, is now a Bethesda studio and working on a new Fallout game. Turn 10 Studios, developer of Forza Motorsport, is merging with Playground Games, which handles Forza Horizon and Fable. King, the Candy Crush developer, will now incorporate Microsoft Casual Games.
Microsoft has also indicated its intention to close Hellblade developer Ninja Theory, following failed sale negotiations. A consultation period with staff has begun, casting doubt on the future of the upcoming Hellblade sequel, Senua. The future of Arkane, developer of Blade, is still under negotiation with management.
Double Fine, the studio behind Psychonauts, and Compulsion Games, responsible for South of Midnight, have already transitioned to independent status as part of the Xbox reset. Undead Labs, makers of State of Decay, has also successfully transitioned and will release State of Decay 3 on Game Pass day one with a new publisher.
Booty stated that the objective of these changes is to "strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise." This significant overhaul of Microsoft's gaming operations aligns with Sharma's ambitious goal of reaching one billion daily active users in gaming by 2030, aiming to improve financial performance and enhance key franchises like Halo, Minecraft, and Fallout.