Xbox has transferred legendary UK studio Rare and ownership of the Halo franchise to Activision, announced the imminent closure of Ninja Theory, and enacted sweeping cuts at Halo Studios. The news was announced via an Xbox Wire post this morning, and followed earlier reports of planned layoffs.
In the blog post, the company said that attempts to sell Ninja Theory had failed, and it was beginning a consultation process on its proposed closure. The firm said: "Undead Labs has now successfully transitioned on similar terms and, with a new publisher, will release State of Decay 3 day one on Game Pass."
Microsoft said that the next Halo title would be "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. A small team at Halo Studios will continue supporting the Halo community and games in-market."
"Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward. Consultation with Arkane remains underway and is expected to continue through the end of the year."
The changes at a glance:
- 268 roles have been lost across Halo Studios, other first-party studios, and Xbox Game Studios management and central functions.
- Activision will "expand its remit" to Rare and Age of Empires studio World's Edge, and will be developing the next Halo title, which will be led by a new "purpose-built team that is separate from ongoing development and plans for Call of Duty".
- Bethesda will "expand its remit" to include Obsidian, which will continue working on Grounded and the previously announced Fallout sequel.
- King will expand its remit to include Microsoft Casual Games.
- Playground and Turn 10 will come together as one studio focused on the Forza and Fable franchises.
- Undead Labs has left the business under similar terms as Double Fine and Compulsion Games, and will release State of Decay 3 with a new publisher.
- Ninja Theory is proposed for closure after two separate agreements fell through; a consultation process has begun with staff, although the firm is "continuing to explore other paths forward".
- Arkane Lyon remains in a consultation process, which is expected to continue through the end of the year.
Today's news is the latest in the firm's ongoing restructuring as part of what CEO Asha Sharma has termed a "resetting of the business". This has included the divestment of five studios including Ninja Theory and Undead Labs, with Compulsion Games and Double Fine regaining independence in the last month, and sweeping layoffs across the organisation worldwide, with recent deep cuts at Zenimax Online Studios and id.
Rare, founded in 1985 and part of Xbox since 2002, currently maintains online pirate game Sea of Thieves, but its most recent new release Everwild was cancelled amid major Xbox cuts in 2025. Halo Studios was launched as 343 Industries in 2007, but rebranded in 2024 and shipped Halo: Campaign Evolved earlier this year. Ninja Theory is currently working on Senua.
Halo Studios' most recent release was July's Halo: Campaign Evolved, a remake of the single-player element of 2001's Halo: Combat Evolved. That title received generally favourable reviews but was Halo Studios' first release since 2021's Halo Infinite, which had an extended and troubled development process that was attributed to difficulties with its in-house Slipspace engine amid allegations of poor management. Several senior figures departed following that game's release, many more were subsequently made redundant during major staff cuts in 2023, and the studio announced a switch to Unreal Engine and a rebranding as Halo Studios in 2024.
At the time, Xbox said Halo Studios was working on "multiple new experiences" enabled by the shift to the Unreal platform, but Campaign Evolved was the only project announced.
Microsoft said that the next Halo title would be "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. A small team at Halo Studios will continue supporting the Halo community and games in-market."
Last week, Call of Duty mainstay Treyarch announced it would be "moving on to something new" after it completed work on the most recent Black Ops title; Activision had previously committed to changing its CoD release strategy after releasing back–to-back Black Ops titles and seeing significant sales underperformance on the second.
Halo Studios was founded in 2007 as 343 Industries to maintain the Halo franchise, following series creator Bungie's separation from Microsoft. Bungie went on to launch the Destiny franchise, published by Activision, before being acquired by Sony in 2022 (and experiencing its own major cutbacks this year). A number of Bungie veterans stayed with the franchise when it moved to 343, but the major names have subsequently departed to other studios.
Today's announcement aligns with Sharma's stated goals of investing in the firm's core IP – evidenced by the announcements of new Fallout, Diablo, and StarCraft titles in recent months – and reducing fragmentation in the business, placing its two chief shooter IPs under the same brand. It's likely that Halo Studios' slow pace of releases counted against it, compared to Activision's annual – if not always beloved – releases of Call of Duty titles.
Xbox has a stated goal of cutting 3,200 jobs this year as part of the restructuring process initiated by Sharma. Today's announcement said it was "roughly three-quarters of the way through", suggesting a further 800 job cuts are expected. Studios not yet impacted include Blizzard, Gears developer The Coalition, and InXile, developer of Clockwork Revolution.
This story has been updated.