Microsoft has confirmed a major change for one of gaming’s most recognizable franchises, with Activision now responsible for developing the next mainline Halo game. The decision comes as Microsoft carries out another significant restructuring of its Xbox operations, including 268 job cuts across Halo Studios, other first-party teams, and Xbox Game Studios management and central functions. Most of the affected positions are reportedly located at Halo Studios. These reductions follow the 1,600 jobs eliminated during the summer and form part of the wider reorganization initiated under Xbox chief Asha Sharma. Microsoft says the restructuring announced earlier in the year is now roughly three-quarters complete.

Development of the next Halo will be handled by a newly created Activision team dedicated specifically to the franchise and operating separately from the studios responsible for Call of Duty. Halo Studios will remain active, although with a considerably smaller team focused on supporting the existing games and the Halo community. Activision president Rob Kostich said the company intends to build a title capable of honoring Halo’s history while preserving the qualities that originally established the series as one of Xbox’s defining properties. Microsoft has not announced a release window, and it remains unclear whether the project will continue ideas previously developed by Halo Studios, introduce a broader reboot, or establish a new long-term development structure for the franchise.

The transition follows several years of changes surrounding Halo. Microsoft created 343 Industries after Bungie became independent, with the studio subsequently producing Halo 4, Halo 5: Guardians, and Halo Infinite. In 2024, 343 Industries became Halo Studios and announced that future projects would use Unreal Engine, showcasing its early technical work through Project Foundry. More recently, Halo: Campaign Evolved was introduced as a remake of the original Halo campaign. Activision’s takeover now raises questions about how much of the technology, concepts, and development work produced during that period will remain part of the next game.

Halo is only one element of a much broader transformation inside Microsoft Gaming. Rare and World’s Edge are also being placed under Activision, while Obsidian is moving into Bethesda’s organization. Turn 10 is being combined with Playground Games, and Microsoft Casual Games is joining King. The company has also begun consultation procedures concerning Ninja Theory and continues discussions over Arkane’s future, while Double Fine, Compulsion Games, and Undead Labs have moved toward independent structures. Microsoft says the objective is to operate fewer business units, concentrate resources around major franchises, and simplify the organization of its gaming portfolio. The changes leave Activision with an increasingly central role inside Xbox, while the future direction of Halo, Rare, and several other studios remains one of the biggest questions surrounding Microsoft’s gaming strategy.