Xbox Announces Further Layoffs, Restructuring Within Activision, Bethesda

On the morning of September 22, 2026, at approximately 10:00 AM EST, Xbox announced further restructuring and the continuation of previously announced layoffs as CEO Asha Sharma aims to reinvent Xbox and get it back on course. Xbox Executive Vice President and Chief Content Officer, Matt Booty, sent the announcement this morning to all Xbox teams.

Xbox will be laying off 268 employees across Halo Studios, other first-party studios, and central functions. According to Booty, Xbox is now about 75% of the way through the restructuring process it began in July. As a result, aside from Double Fine’s and Compulsion Games’ return to the independent scene, Undead Labs has now also officially transitioned into an indie studio, and will release State of Decay 3 on Game Pass as soon as it launches. Ninja Theory had two agreements fall through, so they will enter consultation, leading towards the studio’s closure. Arkane is still in talks with Xbox, which are expected to last throughout 2026.

Studios still under Xbox are undergoing a large restructuring effort. Activision will officially be developing the next Halo, as well as expand its remit to World’s Edge and Rare. Activision will now own the rights to Halo, Call of Duty, Crash Bandicoot, Spyro, Tony Hawk’s Pro Skater, an upcoming title from the new studio Elsewhere Entertainment, and the properties of World’s Edge, and Rare, including Age of Empires and Sea of Thieves.

Activision made a statement, saying, “We’re thrilled to welcome Halo, Rare, and World’s Edge to Activision. It’s an honor and a responsibility that we do not take lightly.  These teams and their games have inspired fans around the world for decades. For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy, while staying true to what made players love it in the first place.  It is a bold ambition, one that this franchise deserves. We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community. To the World’s Edge and Rare teams, we can’t wait to get to work together.”

Bethesda will also take over Obsidian, which will continue working on projects such as Grounded and the new Fallout project Bethesda Game Studios is also working on. King will include Microsoft Casual Games, and Playground and Turn 10 will combine into one studio. Together, Playground and Turn 10 will work on Forza and Fable games.

GameObserver will continue to follow Xbox’s restructuring process. For all your gaming news, be sure to stay tuned!