Microsoft hands Xbox's biggest franchises to three other publishers it owns

For anyone holding a co-dev, porting or publishing contract inside Microsoft's gaming org, the line to read in the announcement is the third group in the cut list. Microsoft says the 268 eliminated roles come from Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer ^[1]. The company did not say how the 268 split across those three groups.

The reassignments are franchise-level. Activision, which Microsoft bought just under three years ago ^[20], now runs Halo development through a new team kept separate from the Call of Duty teams ^[2], and it takes Rare and Age of Empires studio World's Edge with it ^[4]. Obsidian leaves Xbox Game Studios for Bethesda Game Studios and a Fallout mandate ^[5]. Minesweeper, Solitaire and the rest of the casual portfolio go to King ^[8]. Playground and Turn 10, the Fable and Forza teams, merge into one ^[9]. What remains in Xbox Game Studios is a handful of studios, among them The Coalition and InXile ^[17].

The reset laid off 1,600 people in July, with 1,600 more planned across the following fiscal year, around 3,200 in all ^[6][7]. The 268 announced now come out of that second wave, which leaves roughly 1,332 roles still unnamed ^[24]. Two studios have already left the company outright: Double Fine and Compulsion went independent ^[10].

Xbox CEO Asha Sharma's stated reason in July was structural. She said part of the pre-existing problem was that teams, studios and functions often operated independently, making it harder to work toward a shared goal ^[13]. Ars Technica says the restructuring is designed to reduce that independence at the teams behind the biggest franchises ^[16]. Sharma's goal, per The Verge, is a company reaching "more than a billion people each day" ^[23], with investment concentrated on Minecraft, Halo and Candy Crush and Game Pass spending under review ^[19].

"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," Activision president Rob Kostich said in a statement provided to Kotaku ^[14]. He said the purpose-built team is already being assembled ^[15]. Halo Studios, formerly 343 Industries, shipped Halo: Campaign Evolved ^[11], which The Verge calls a well-received Combat Evolved remake released in July ^[12]. It is now a small team supporting the community and games in-market ^[3].

Microsoft still plans a future in the hardware business, The Verge reports ^[21], and the same piece says the plan for exclusives is hard to follow ^[22].

What matters for an Xbox dependency is whether the franchise is on the named focus list, and whether the counterparty has moved under a publisher with its own slate and its own budget. A deal attached to Halo or the casual portfolio has new approvers and a funded roadmap. A deal attached to a studio still sitting inside Xbox Game Studios sits against the unnamed remainder of the second wave. Gears of War: E-Day ships next month from The Coalition, which is still inside Xbox Game Studios ^[18][17].