Microsoft is eliminating 268 roles across Xbox as part of the next stage of what it calls its organizational “reset.”
The cuts reportedly hit Halo Studios, other unnamed first-party studios, Xbox Game Studios management, and shared central teams. Microsoft hasn’t shared a studio-by-studio breakdown. It also hasn’t said where the jobs are, what kind of jobs they are, or when each cut takes effect.
The biggest change involves Xbox’s most famous series. A new team inside Microsoft-owned Activision will develop the next Halo game. Halo Studios will stay on in a support role.
That engine switch was a big part of Halo Studios’ fresh start. In October 2024, 343 Industries renamed itself Halo Studios. It dropped the in-house Slipspace Engine behind Halo Infinite and said several Halo projects were in the works. Less than two years later, the lead role has moved elsewhere.
The shift ends a rough decade for 343. The Master Chief Collection had a broken launch. Halo 5 and Halo Infinite were both criticized for missing features like co-op and Forge at release. Infinite then needed a long recovery period after launch.
Ninja Theory’s future is in doubt
Microsoft says two possible deals involving Ninja Theory fell through. It will now start consulting with employees about a proposed closure. It says it’s still looking at other options.
Ninja Theory isn’t closed yet. In the UK, consultation must happen before a closure decision. It can still end in a sale, a spin-off, or another deal. Microsoft didn’t name the failed partners or say how many staff are affected. It also didn’t say what happens to the Hellblade IP.
Microsoft bought the studio in 2018. It released Senua’s Saga: Hellblade II in 2024 after a long development cycle.
Arkane is still waiting
Consultation involving Arkane is still ongoing and is expected to run until the end of the year. This reportedly concerns the French team, Arkane Lyon. Microsoft already closed Arkane Austin, the Redfall studio, in 2024.
Arkane Lyon made Dishonored 2 and Deathloop and is working on Marvel’s Blade. Microsoft hasn’t given an update on Blade.
French law requires consultation with the company’s Social and Economic Committee, an employee group. The government doesn’t approve or block the closure. It sets the legal rules the process must follow.
Three studios go independent
Compulsion Games (South of Midnight) and Double Fine (Psychonauts, Keeper) were returned to their management teams in August. They reportedly kept their IP and back catalogs and received funding to keep running for a while. Microsoft hasn’t shared the amount or how long it will last.
Undead Labs has now done the same. The studio says it “has completed its separation from XBOX and is now operating as an independent, employee-owned game development studio.” It will finish State of Decay 3 with a new, unnamed publisher. The game will still launch day one on Game Pass. There is no release date yet.
Microsoft says Xbox is about three-quarters of the way through its reset. That means more changes are coming. The company hasn’t said what they are, whether more layoffs are planned, or when the process will end.
