Microsoft is cutting 268 more positions at Xbox Game Studios and selling off its biggest franchises to companies it purchased earlier. The new Halo went to Activision. Obsidian is now under Bethesda and working with them on a new Fallout, while Forza and Fable are under one roof. The British Ninja theory turned out to be the worst.
What Matt Booty announced
The memo from Xbox Game Studios head Matt Booty was released on September 22, 2026. The cuts affected Halo Studios, other internal teams, core functions, and XGS leadership itself. According to Booty, and counting the changes that began in July, Microsoft is now about three-quarters of the way through the Xbox restructuring announced earlier.
Judging by the memo, Xbox’s own publishing business is losing influence and its franchises are being distributed among companies acquired by Microsoft in recent years. It is the American companies Activision and Bethesda which benefit the most. For British studios, the picture is mixed. Rare welcomes new bosses, Playground merges with an American team and Ninja Theory waits to find out if it will be shut down.
Halo returns to Call of Duty publisher
Activision is tackling the British Rare, the World’s Edge studio and the development of the next Halo. A separate team is being assembled for the new game, and Microsoft has stressed that this has nothing to do with current Call of Duty development. A small part of Halo Studios will remain to support already released games and the community.
For fans, this is probably the hardest news to accept of the day. Halo has been the face of Xbox since 2001, and its next installment will now be published by a company whose main shooter spent years battling it out for the same players. The Washington Post described the story much the same way, describing Halo as having passed to Call of Duty’s publisher.
Rare also finds himself in an unfamiliar position. Twycross studio has worked directly with Microsoft since 2002, and before that its biggest games were released through Nintendo. Now there’s an extra layer between it and the Xbox.
Obsidian goes to Bethesda
Management of Bethesda now extends to Obsidian. The studio remains Grounded and is making a new Fallout with Bethesda Game Studios. Obsidian released Fallout: New Vegas in 2010, so it knows the setting firsthand.
The solitaire goes to the king
King, the maker of Candy Crush, is taking on Microsoft’s casual games, i.e. Solitaire, Minesweeper and the other two-minute games that have come with Windows for decades. The genre lives in short sessions. A game of Klondike Solitaire is easy to abandon halfway through and pick up again at lunch or on the subway. Online casinos operate at the same pace, since a series of spins on a slot machine or a game of blackjack usually spans the same few minutes, which is why most games on Spinchester Casino are designed for quick sessions on a phone. For King, this is more or less his home turf. The company has spent years living off games designed for five-minute breaks.
Forza and Fable in the same hands
British companies Playground Games and America’s Turn 10 merge into a single studio, which takes over Forza and Fable. Playground is known for Forza Horizon and Turn 10 were created by Forza Motorsport, so for the first time, both installments of the racing series will sit with a single team. Playground was already working on Fable.
Who left before the memo
Some studios had already left Xbox. Compulsion Games and Double Fine returned to their own management and took their intellectual property, back catalogs and funding with them. Undead Labs has moved to a new publisher, but the promise of State of Decay 3 still stands and the game will be coming to Game Pass on day one.
Ninja and Arkane Theory
Things look worse for Cambridge’s Ninja Theory, the developer of Hellblade. Microsoft tried twice to sell the studio to someone else, and both deals fell through. The company has now opened consultations on a possible closure.
Consultations are also underway at Arkane, the Dishonored studio, and will extend until the end of 2026. Nobody yet knows what will remain of the team.
What’s next
The next Xbox town hall is set for October 6. If Booty’s figures are correct, about a quarter of the restructuring remains to come. It’s hard to imagine that happening without more job cuts, although the memo doesn’t say so clearly.
