The “Xbox Reset” has entered its final stages as Microsoft consolidates its gaming studios under a new hierarchy dominated by Activision and Bethesda. In a memo released on September 22, 2026, Xbox Chief Content Officer Matt Booty confirmed that the company has cut an additional 268 roles, bringing the total workforce reduction to 75% of the goal established in July 2026.
Among the most significant changes is the dismantling of the leadership at World’s Edge, the dedicated studio for the Age of Empires franchise. Creative Director Adam Isgreen has been laid off as part of the restructuring. Following the layoffs, the management of World’s Edge—along with Sea of Thieves developer Rare—has been transferred to Activision.
The shift signals a fundamental change in how Microsoft manages its first-party intellectual property. Activision will now lead the development of the next mainline Halo title, utilizing a new “purpose-built team” for the project. Halo Studios, formerly known as 343 Industries, will be relegated to a support role for existing live-service games and community initiatives. This transition follows the mixed reception of the 2026 remake, Halo: Campaign Evolved, which precipitated the hand-off to Activision’s leadership.
According to reporting from GeekWire, this wave of cuts is part of a larger plan to eliminate 3,200 positions by the end of the fiscal year. The reorganization effectively ends the “loose federation” model where individual studios operated with high degrees of autonomy, moving toward a centralized management structure overseen by the division’s largest acquisitions.
Beyond the move to Activision, Microsoft is merging several other major entities. Bethesda’s remit has expanded to include Obsidian Entertainment, the developer behind The Outer Worlds and Avowed. Meanwhile, Playground Games and Turn 10 Studios are being merged into a single organization focused on the Forza and Fable franchises. King has also absorbed Microsoft Casual Games, further integrating legacy mobile and casual titles into the Activision Blizzard King ecosystem.
The restructuring has also resulted in the closure of Ninja Theory. The Hellblade developer is in the process of being shuttered after reported efforts to reach divestiture agreements fell through. In contrast, other previously acquired studios including Undead Labs, Double Fine, and Compulsion Games have successfully regained their independence.
Official communication regarding the changes, published on Xbox Wire, framed the moves as a necessary step to streamline operations. While World’s Edge recently saw the successful launch of Age of Mythology: Retold and the expansion of its franchise to macOS and PlayStation 5, the studio will now operate under the broader Activision publishing umbrella rather than the traditional Xbox Game Studios leadership.
