Gaming

Activision Is Absorbing Xbox's Original Studios

Microsoft folded Halo, Age of Empires maker World's Edge, and Rare under Activision, the studio it acquired in 2023, while cutting 268 more Xbox Game Studios jobs.

GamingBy Leon Soliman2026-09-223 min read

AI-assisted, edited by humans. | Editor-in-Chief: Leon Soliman | Editorial standards

Activision Is Absorbing Xbox's Original Studios

The Numbers Behind the Reset

On September 22, 2026, Microsoft cut 268 more roles across Xbox Game Studios, part of the 3,200 total job cuts it announced in July and now roughly three-quarters complete. Development of the next Halo game is shifting to Activision, run by a newly assembled team kept separate from the Call of Duty studio, while a smaller team stays at Halo Studios, formerly 343 Industries, to support existing games and esports. Activision also takes over World's Edge, maker of Age of Empires, and Rare, maker of Sea of Thieves. Obsidian Entertainment moves under Bethesda, Turn 10 Studios and Playground Games merge into one studio producing both Forza and Fable, and Undead Labs spins off independently to finish State of Decay 3.

Xbox chief content officer Matt Booty framed the changes as an efficiency move: the goal, he said, is to strengthen franchises by operating fewer business units. Activision president Rob Kostich said the aim for Halo specifically is to make the greatest game in the franchise's history.

Ninja Theory's Survival Depended on Someone Else's Budget

Ninja Theory, the UK studio behind the critically acclaimed Hellblade II, faces a different outcome. Two separate agreements to sell the studio fell through, and Microsoft is now entering the UK-mandated consultation period over Ninja Theory's proposed closure, while it continues to look for an outside buyer. Critical reception did not decide this outcome. A studio can ship a well-reviewed game and still end up in a closure consultation if no buyer materializes and its parent no longer wants to carry it inside the restructured business.

The Acquired Studio Is Absorbing Its Parent's Originals

Activision was the acquisition. Microsoft bought Activision Blizzard for 69 billion dollars in 2023, after nearly two years of antitrust review on both sides of the Atlantic. Three years later, the studios now moving under Activision's operational umbrella are not Activision properties. Halo Studios traces back to Bungie's original Xbox launch title and then 343 Industries, founded in 2007. World's Edge and the Age of Empires franchise predate the Xbox division entirely. Rare has been part of Microsoft since 2002 and shipped Xbox's first killer app, GoldenEye's spiritual successor Perfect Dark, in 2000. None of that history sits inside Activision. It is Xbox's own oldest studios that are now being folded into the structure of the company Xbox bought.

What This Means If You Work For, or With, Xbox

For anyone at a first-party studio, a work-for-hire shop, or a vendor with a Microsoft platform relationship, the signal to watch is not a franchise's age or a game's review score. Hellblade II was acclaimed and its studio is still in a closure consultation. Halo is nearly 25 years old and its development team is being replaced with one built inside Activision. The actual variable is whether a studio sits inside a business unit Microsoft is still growing, which right now is Activision, or one it is consolidating down to fewer, larger units. A contractor or licensor should ask which side of that line their relationship sits on before assuming a beloved franchise or a good review is any protection at all.

Frequently asked questions

Is Halo Studios shutting down?

No. A smaller team remains at Halo Studios, the renamed 343 Industries, to support existing games and esports. Development of the next mainline Halo game moves to a newly assembled team inside Activision.

Why might Ninja Theory close despite Hellblade II's acclaim?

Two separate agreements to sell the studio fell through and Microsoft has not found another buyer. Critical reception has not been the deciding factor in this round of Xbox restructuring; whether a business unit is growing or shrinking has been.

How many jobs has Xbox cut in this restructuring overall?

Microsoft announced 3,200 total Xbox job cuts in July 2026. The 268 roles cut on September 22 are part of that total, which is now roughly three-quarters complete.

The studio Microsoft bought is now the one absorbing the studios Microsoft built.

XboxActivisionMicrosoftHalo StudiosNinja TheoryWorld's EdgeRareForza

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