Microsoft's Xbox division announced on 22 September 2026 that it is laying off 268 employees and consolidating several of its game studios under Activision, the maker of Call of Duty. The cuts affect staff at Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer, according to a memo from Xbox's Executive Vice President and Chief Content Officer Matt Booty. As part of the same reorganisation, Activision is taking on development of the next Halo title, led by a new, purpose-built team separate from its Call of Duty operations, and is expanding its remit to include the Sea of Thieves and Age of Empires franchises, as well as oversight of Rare and World's Edge.
The September action brings Xbox roughly three-quarters of the way through its previously announced restructuring programme, Booty wrote. The fate of two further studios remained unresolved: two separate agreements to transfer Ninja Theory to new ownership fell through, and Xbox is now in talks with Ninja Theory employees about a proposed closure while continuing to explore other options. Separately, Xbox is seeking to divest Arkane Studios, the Lyon-based developer; under French law, it has entered a formal consultation period expected to run through the end of 2026. On a more settled note, Undead Labs has successfully transitioned to a new publisher and will release 'State of Decay 3' as a day-one title on Game Pass. An all-Xbox town hall is scheduled for 6 October to discuss restructuring progress and future plans.
The September layoffs form part of a broader reset that Xbox CEO Asha Sharma set in motion in July 2026, when the division cut 1,600 employees in what Sharma described as 'the most significant restructure in Xbox history' [Source: The Verge]. At that time, Sharma announced plans to reduce Xbox's total workforce by up to 3,200 employees, representing approximately 20% of total staff, over the following year. The July round also included initial plans to divest studios including Compulsion and Double Fine. The BBC has reported the total planned job losses at 3,600, a figure that differs from the up-to-3,200 cited by multiple other outlets at the time of the July announcement.
Microsoft completed its acquisition of Activision Blizzard in 2023, making Activision an internal unit rather than a separately listed company. Microsoft (MSFT) is the only publicly traded entity directly affected by the restructuring. No market-price reaction data was available at the time of publication.
Sources: The Verge, Bloomberg, Engadget, Variety, BBC News