Xbox Cuts Jobs, Moves Game Studios Under Activision

Microsoft Corp.’s Xbox video-game unit is laying off 268 employees and consolidating several studios under Call of Duty maker Activision.

Activision, which the tech giant purchased for $69 billion in 2023, will helm development on the next Halo title, according to a note Xbox Chief Content Officer Matt Booty shared with staff Tuesday morning. Activision will also oversee the studio Rare and Age of Empires maker World’s Edge. Microsoft’s Halo Studios will continue to operate current Halo games, although staff will be impacted by the layoffs.

Microsoft’s Bethesda will also absorb Obsidian. The studio will continue to work on Grounded, as well as a new Fallout project.

“I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them,” Booty wrote in the letter, which was seen by Bloomberg.

The moves come after Microsoft announced in July that it would cut a total of 3,200 jobs over the next year — a 20% staff reduction. At the time, Xbox Chief Executive Officer Asha Sharma explained in an email to staff that “our business today is not healthy,” adding that Xbox was operating at margins three to 10 times lower than comparable businesses. “We must reset Xbox,” she wrote.

News of the fresh layoffs was first reported by The Information. Xbox is now three-quarters of the way through its broader cuts, according to Booty’s note to staff.

Halo, created by Bellevue-based Bungie, launched in 2001 alongside the original Xbox, transforming the console into a serious competitor to Sony Group Corp.’s PlayStation and Nintendo Co. But Bungie spun out of Xbox in 2007 after the release of Halo 3, committing to two more games and then stepping away from the franchise.

Xbox formed a subsidiary called 343 Industries, which was recently rebranded as Halo Studios, to develop new games in the series. But the sequels have been costly to develop, were released on an inconsistent schedule and have struggled to connect with fans. The most recent release was a remake of the first Halo game called Halo: Campaign Evolved.