First, we are eliminating 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer.
Matt Booty put that in an email to Xbox staff on Tuesday morning. Microsoft published the memo in full on Xbox Wire the same day, under the title Continuing Our Reset.
Booty is Xbox’s chief content officer. He wrote that he is deeply grateful for what colleagues have built, and knows how difficult the day will be for those leaving. His memo runs to three parts. The job cuts come first, then a reorganisation of the studios, then an update on the ones Microsoft is trying to sell.
Aaron Holmes had the cuts first. Hours before the memo went out, he reported for The Information that Xbox planned to lay off hundreds of staff. It would also consolidate several studios, he wrote, citing someone briefed on the plans.
268 is only the gaming figure
Microsoft cut more than that on Tuesday. Ashley Stewart put the company-wide figure at around 500 employees, writing in Business Insider. A small number of the roles sat outside gaming, in units such as cloud and AI.
Todd Bishop put it slightly higher. Microsoft described the total as fewer than 600 globally, he reported for GeekWire, with about 300 in Washington state. Cuts also landed in marketing and research.
Microsoft’s own memo gives only the 268.
Activision takes the next Halo
The reorganisation moves Xbox’s biggest franchise out of the studio built to make it.
Activision will develop the next Halo title, Booty wrote, using a new team that is separate from Call of Duty. Activision also picks up Rare, which makes Sea of Thieves, and World’s Edge, which looks after Age of Empires.
Halo Studios does not close. A small team stays to support the community and the games already on sale.
Rob Kostich, Activision’s president, set out the brief in a statement.
For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy, while staying true to what made players love it in the first place.
He said the team is already being assembled.
Halo has moved studios before
Halo launched in 2001 alongside the first Xbox, made by Bungie. Bungie left in 2007, after Halo 3. Cecilia D’Anastasio and Jason Schreier reported for Bloomberg that Microsoft then formed 343 Industries to carry the series on.
That studio was renamed Halo Studios. Its games have been expensive, irregular and hard to sell to fans, according to Bloomberg. The most recent release was Halo: Campaign Evolved, a remake of the original, which arrived in July.
Two analysts gave the BBC their read. Christopher Dring, editor-in-chief of The Game Business, said Halo was once Xbox’s crown jewel. It had not been one for more than a decade, he said.
Dring said putting the series under Activision makes sense. His caveat was that the company should be mindful not to lose what makes Halo unique.
Jez Corden of Windows Central called the change a dramatic move. Halo was once to Xbox what Mario is to Nintendo, he told the BBC, but years of mismanagement have eroded that.
Three more studios change hands
Bethesda absorbs Obsidian, the studio behind Fallout: New Vegas. Booty wrote that it keeps its current projects, including Grounded and a new Fallout game made with Bethesda Game Studios.
King, which makes Candy Crush, takes Microsoft Casual Games.
Playground and Turn 10 merge into a single studio for Forza and Fable. Booty described the two as creative and franchise partners for over a decade.
The third part of the memo covers the studios Microsoft is trying to sell.
Two separate agreements to sell Ninja Theory fell through. Microsoft will now open consultation with employees on a proposed closure, Booty wrote, while continuing to explore other paths forward.
The Cambridge studio made Hellblade: Senua’s Sacrifice and won a Bafta for it. It was one of the five studios put up in June.
Arkane, in Lyon, is still in consultation, which Booty expects to run to the end of the year. French law obliged Microsoft to open that process first, Kris Holt noted in Engadget. Only then can it decide whether to sell, spin out or close the studio.
Three of the five got out. Compulsion and Double Fine went back to their management in August with their intellectual property, back catalogues and runway funding. Undead Labs has now done the same.
State of Decay 3 will launch day one on Game Pass under a new publisher.
Independence came at a price. Undead Labs said on LinkedIn that it meant saying goodbye to a significant number of colleagues, and declined to say how many.
There have been far too many announcements like this across the industry, and we hate adding to that list. These are people we’d hire again in a heartbeat, and we hope the industry takes notice.
Three quarters of the way through
Booty wrote that the actions completed since July, including the divestitures, bring Xbox roughly three-quarters of the way through the restructuring it announced this summer.
That programme covers 3,200 jobs and five studios, about a fifth of the division.
Asha Sharma, Xbox’s chief executive, told staff in July that the business was not healthy. Xbox was running at margins three to 10 times lower than comparable businesses, she wrote, according to Bloomberg. We must reset Xbox, she added.
The warning signs were already on the record. Microsoft was considering a spin-off in June, when the division’s margins hit 3%. It had raised console prices three times in 13 months. In July it admitted that cloud gaming had not worked yet.
Booty ended the memo with a date. Xbox holds a town hall on 6 October, where he says the team will look ahead to one of the strongest line-ups in its history.