Xbox: 268 Layoffs, Halo Handed to Activision, Playground and Turn 10 Merge

Another round of Xbox layoffs this week, confirmed on September 22. The division is cutting 268 more jobs and thoroughly reshuffling several of its internal studios.

What's happening this week

The cuts primarily hit Halo Studios, which will be reduced to a small team handling community support and existing games: the studio now falls under Activision, alongside Rare and World's Edge. The rest of the cuts affect Xbox Game Studios management and central functions.

Matt Booty, Xbox EVP and Chief Content Officer, summed it up: "The actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring."

A big game of studio musical chairs

Beyond the job cuts, Xbox is redrawing its entire internal studio org chart. Three moves worth knowing about:

• Halo, Rare, and World's Edge now fall under Activision.
• Obsidian Entertainment (Fallout: New Vegas, Avowed, The Outer Worlds) now falls under Bethesda Softworks. Important distinction from Ninja Theory or Arkane: Obsidian isn't closing and isn't changing hands, the studio keeps working on Grounded and its new Fallout game in collaboration with Bethesda Game Studios.
• Playground Games and Turn 10 Studios are merging into a single studio, led by Playground co-founder Trevor Williams, refocused on the Forza and Fable franchises. Turn 10 has run Forza Motorsport since 2005, Playground has run Forza Horizon: Matt Booty describes the two studios as "technological, creative, and franchise partners for over a decade." The merger doesn't spell out how the two Forza series will be split between teams going forward, which has some of the community worried about Forza Motorsport's future specifically.

The full plan since July 2026

This week is part of a much bigger plan launched in July by Xbox's new head, Asha Sharma: 3,200 job cuts total for the fiscal year, roughly a fifth of the entire division. 1,600 jobs were already cut in July, with heavy cuts at id Software (Doom) and ZeniMax Online Studios (The Elder Scrolls Online), alongside five internal studios being divested.

Among those divestitures: Compulsion Games and Double Fine Productions are becoming independent studios while keeping their IP, while Undead Labs is changing ownership.

Ninja Theory and Arkane Studios, the two most worrying cases

Ninja Theory (the Hellblade series) was also meant to be sold off, but two separate sale attempts have collapsed: the studio now faces outright closure.

Arkane Studios (Dishonored, Prey, Deathloop) is also being divested. The France-based studio has entered a consultation process with its workforce as required by French labor law, a step expected to run through the end of 2026 and that could still end in a sale, a spin-off, or closure.

Why this matters for PS5 players too

These two studios aren't just Xbox names, their games are very much on PS5. Deathloop, developed by Arkane Lyon, was actually a PS5 console exclusive at launch in 2021 before coming to Xbox a year later. The PlayStation Store also carries an Arkane Collection bundling Dishonored, Dishonored 2, and Prey. On the Ninja Theory side, Hellblade: Senua's Sacrifice got an optimized PS5 version in August 2025, alongside Senua's Saga: Hellblade II, which arrived on PlayStation for the first time after being an Xbox/PC exclusive for over a year.

If Ninja Theory actually closes, there simply won't be a sequel to a series that only just arrived on PS5. Same story for Arkane if the French process ends in closure rather than a sale.

None of these games have a guide on Pathline yet

Neither Hellblade, nor Deathloop, nor the Dishonored/Prey games are currently in our catalog. We're keeping an eye on how this restructuring plays out, which is expected to wrap up by the end of Microsoft's fiscal year (June 2027).