Xbox Cuts 268 More Jobs and Hands Halo to Activision: 10,000+ Industry Layoffs This Year While China Grew 12%
Xbox published an internal memo from chief content officer Matt Booty on September 22 confirming 268 role cuts across Halo Studios, other first-party teams and the Xbox Game Studios management layer. Activision expands its remit to Halo, Sea of Thieves and Age of Empires; Obsidian reports to Bethesda; Playground Games and Turn 10 merge. Hellblade developer Ninja Theory faces closure. Meanwhile, China's game market grew 12.17% in the first half of 2026 — a stark contrast to the West's contraction.
What Happened: Where the 268 Roles Were Cut
The memo, in one sentence
"I'm writing to share that we are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer," Booty wrote, adding that actions completed since July, including studio divestitures, "bring us roughly three-quarters of the way through previously announced restructuring".
The full reorganisation list
Activision now oversees Halo — with a new team purpose-built and separate from Call of Duty development — plus Rare (Sea of Thieves) and World's Edge (Age of Empires). Obsidian reports directly to Bethesda. King takes over Microsoft Casual Games. Playground Games and Turn 10 fold into a single team covering Forza and Fable.
Ripple One: Halo Now Reports to the Call of Duty Publisher
What is left of Halo Studios
By the official account, Halo Studios keeps a small contingent supporting in-market titles such as Halo Infinite and the community. The next flagship Halo comes from Activision's new team. Activision president Rob Kostich framed it warmly: "We're thrilled to welcome Halo, Rare, and World's Edge to Activision."
Why players took it personally
Xbox's most iconic franchise now sits inside the Call of Duty publishing machine, moving the conversation from "is the game good" to "how much autonomy does this brand still have."
Ripple Two: An Award-Winning Studio Waiting on Its Verdict
Ninja Theory faces closure
Ninja Theory, the Hellblade developer Microsoft acquired in 2018, faces closure after two potential buyout talks fell through .
The middle layer absorbs the pain
Its games were well reviewed and award-winning, but never big enough commercially. Studios in that bracket go first when budgets tighten.
Ripple Three: The Industry Numbers Finally Line Up
Western forecasts keep being revised upward
ASGC's 2026 layoff forecast started at 8,025 jobs in January, was raised to 14,259 on July 26 and peaked at 14,666 on August 11. By mid-August, 10,618 confirmed cuts across 126 companies and 29 studio closures worked out to about 44 jobs lost every day — against roughly 15,631 in 2024 and 9,197 in 2025.
For developers, the recovery is the hard part
Recruiter Skillsearch reports that 22% of developers were laid off in the past year and about 40% have been laid off at some point; 55% of those still have not found new work and 44% are considering leaving games entirely, rising to 76% in the UK looking outside the industry. UK studios with 16–40 staff lost 21.6% of their developers (36Kr, citing Skillsearch).
China's data points the other way
China's game industry association puts first-half domestic market revenue at RMB 188.45 billion, up 12.17% year on year, with overseas revenue from self-developed games at US$12.372 billion, up 30.22%. The 23 listed Chinese game companies tracked by Guotai Haitong reported H1 revenue of RMB 59.109 billion, up 18.29%, and net profit of RMB 12.002 billion, up 40.58%.
Analysis: Why Studios Go First
The cost structure sets the order
AAA and live-service development front-loads cost into production. The moment a flagship franchise's return outlook is marked down, the easiest thing to "modularise" is a mid-sized first-party team: keep the IP, replace the organisation that makes it. Moving Halo into Activision lets one publishing structure carry several flagship franchises and spread fixed costs.
Sony is doing the same thing in the same week
Days earlier, Sony was still absorbing player backlash over ending physical disc production in 2028 and arguing in a California class action that its digital games are licensed rather than owned. Both platform holders are steering profit toward owned storefronts and a smaller number of flagship IPs.
The Risk View: Layoffs Aren't the Cost of the Pivot — They Are the Pivot
Calling this "pain for long-term health" swaps cause for consequence. The people cut do not come back, and dismantled organisational capability is not rebuilt in two years. The largest publishers have the cash, the IP and the storefronts; what they are doing is transferring the risk of slowing growth onto the layer with the least bargaining power. Players will feel it later: fewer new IPs, more sequels, thinner margins for launch-day quality.
FAQ
How many people did Xbox cut this time?
268 roles across Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer (Xbox Wire, September 22, 2026).
Who will develop Halo from now on?
Activision, through a new purpose-built team separate from Call of Duty plans. Halo Studios keeps a smaller group supporting Halo Infinite and the community.
How big are 2026's game industry layoffs?
ASGC forecasts about 13,800 for the year; 10,618 confirmed cuts across 126 companies and 29 studio closures by mid-August, roughly 44 jobs a day (Insider Gaming, August 2026).
Which studios moved in this restructure?
Activision takes Halo, Rare and World's Edge; Obsidian reports to Bethesda; King takes Microsoft Casual Games; Playground Games and Turn 10 merge into one Forza/Fable studio.
Your Turn
Will you still pay full price on launch day for a AAA game? If the next Halo is led by the Call of Duty team, do you buy day one or wait for reviews? Come discuss in the Gghubs comments.