Microsoft's XBOX has reorganized its studios, moving Rare under Activision and Obsidian Entertainment under Bethesda to strengthen franchises and consolidate operations. The restructuring follows July 2026 layoffs and affects ongoing projects including Grounded and a new Fallout collaboration, with Activision also taking the lead on the next Halo title.
Xbox is laying off 268 workers as part of a broader 3,200-person reduction announced in July, with studios being reorganized and merged. Activision will develop the next Halo game as a mainline installment, taking over the franchise from 343 Industries. Several studios including Ninja Theory are being shut down while others are being spun out or absorbed into larger divisions.
Obsidian Entertainment is being restructured under Bethesda as part of Xbox Game Studios reorganization, shifting focus to major franchises including a new Fallout game. Microsoft's nearly decade-long Game Pass content strategy has been refocused to prioritize fewer blockbuster titles like Diablo, The Elder Worlds, and Fallout, with remasters of earlier Fallout titles also in development.
Ninja Theory, developer of the Hellblade series, is entering consultation for a proposed closure after two separate acquisition agreements fell through. The studio, which was acquired by Microsoft in 2018, had been put up for sale following initial Xbox layoffs in July. The closure affects the development of Senua, a new Hellblade game announced just months earlier.