Master Chief Reports to Call of Duty Now: Inside Xbox’s Second Reset Wave

Twenty-five years after Halo launched the original Xbox, the next mainline game belongs to Activision. It arrived in the same memo as 268 more layoffs.

The memo went out on Tuesday, September 22, 2026, under a plain title: Continuing Our Reset. In it, Matt Booty, the executive vice president and chief content officer at Xbox, told staff that the division was eliminating 268 roles across Halo Studios, other first-party studios, and the Xbox Game Studios management and central functions layer. Xbox then published the full text on its own news site, Xbox Wire, which is the primary record for everything that follows.

Signal. What happened: Xbox cut 268 more jobs and reorganized its first-party studios, moving development of the next mainline Halo game to Activision and shifting several other studios to new parent labels. Exact object: a new, purpose-built Halo team inside Activision, separate from Call of Duty, with a reduced Halo Studios team remaining to support Halo games already on sale. When and where: announced September 22, 2026, via an internal memo from Matt Booty republished on Xbox Wire; no title, platform list or release window for the next Halo was given. Source: Xbox Wire, corroborated by The Hollywood Reporter, Variety, Engadget, Kotaku and Game Developer. Why it matters: it hands Microsoft’s defining console franchise to the publisher it bought for roughly $69 billion, and it shows the July restructuring is still unfolding studio by studio. Earlier: September 2026 coverage of Nintendo’s Metroid Ravenous reveal and the Netflix and Sega adaptation deal tracked how the biggest game publishers are reorganizing around their franchises.

Booty framed the cuts as the next stage of a plan already in motion, not a new decision. He wrote that the actions completed since July, including the studio divestitures, put Xbox about three-quarters of the way through the restructuring it had already announced, and he acknowledged how hard the day would be for departing staff and the teams around them.

The announcement was not a complete surprise. TechPowerUp noted that word of another round of Xbox layoffs had leaked only hours before Xbox Wire published the memo, and several outlets that morning reported that consolidation was being discussed across Xbox Game Studios, Bethesda, Activision and Blizzard. When the memo arrived, Blizzard was not among the organizations named in the reshuffle.

The reorganization was the larger news. Booty said the aim was to “strengthen our franchises and games by operating fewer business units,” by grouping teams that already work closely together and concentrating publishing expertise. In practice, that means several familiar studio names now report somewhere new.

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The headline move is Halo. According to the memo, Activision will develop the next Halo title with a new team built specifically for it, kept separate from ongoing Call of Duty development and plans. Halo Studios, the Microsoft studio that has carried the series for more than a decade, will keep only a small team to support the Halo community and the games already in market. The Hollywood Reporter was told the Activision project will be a full mainline installment rather than a spin-off.

It is a striking turn for a franchise that has been synonymous with Xbox since the beginning. Halo: Combat Evolvedlaunched alongside the original Xbox in 2001, developed by Bungie. After Bungie went independent, Microsoft built 343 Industries to take over the series; that studio renamed itself Halo Studios in 2024 and moved development onto Unreal Engine 5.

The timing is also notable. Just two months ago, on July 28, 2026, Halo Studios released Halo: Campaign Evolved, a remake of the original game’s campaign that also marked the series’ first launch on PlayStation 5. It added a new three-mission prequel arc, Operation: METEORITE, featuring the Master Chief and Sergeant Johnson. The studio that shipped that remake is now among the teams absorbing the latest cuts.

Campaign Evolved was first announced in October 2025 at the Halo World Championship and was built entirely in Unreal Engine 5, with split-screen and four-player online co-op, cross-play across platforms and a day-one Game Pass release. At the reveal, Halo Studios community director Brian Jarrard told fans that Halo would be on PlayStation going forward. GamesBeat pointed out at the game’s June release-date announcement that it had been a long wait for fans since Halo Infinite arrived in 2021, and that Microsoft was still working out the franchise’s future. Tuesday’s memo is the clearest answer yet to that question, though it comes from a different part of the company than most fans expected.

Activision president Rob Kostich responded with a statement that was short on specifics and long on ambition. He welcomed Halo, Rare and World’s Edge to Activision, called the handover an honor and a responsibility, and said the company had already started assembling the new team. His stated goal for Halo, as quoted by The Hollywood Reporter, is to “make the greatest Halo game ever.” No studio location, team lead, headcount or release window has been named.

The Unhelmeted: A Study in Armor and Aftermath

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Halo was not the only property to move. Activision’s remit now also covers Rare, the British studio behind Sea of Thieves and Banjo-Kazooie, and World’s Edge, the Microsoft team that oversees the Age of Empires series. Activision, best known for Call of Duty, also publishes Crash Bandicoot, Spyro the Dragon and Tony Hawk’s Pro Skater, so the move folds some of Microsoft’s longest-running first-party work into a publisher with a heavy franchise portfolio of its own.

Elsewhere in the memo, Obsidian Entertainment, the studio Xbox recently tasked with a new Fallout game, moves under Bethesda, which already owns the Fallout series. King, the Candy Crush maker that arrived with the Activision Blizzard deal, will take in Microsoft Casual Games, the group responsible for Solitaire and Minesweeper. Playground Games and Turn 10 Studios are merging into a single studio that will continue to focus on the Forza and Fable franchises.

Rare’s most recent public moment was upbeat: Sea of Thieves appeared at the June Xbox Games Showcase with Custom Seas, a feature that lets players build their own game modes inside the pirate adventure. World’s Edge, for its part, has spent recent years maintaining and expanding the Age of Empires line through remasters and new entries. Both now answer to a publisher whose own business is dominated by a single annual shooter franchise.

Read together, the changes group studios by the kind of games they make and by which publisher already has the relevant expertise, which matches the stated goal of running fewer business units. What the memo does not say is how any of these moves will change day-to-day leadership inside the studios, or whether existing live games such as Sea of Thieves and the Age of Empires titles will see any change in support. Shacknews noted that Rare’s immediate future under its new reporting line is unclear.

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The word reset comes from the top. Asha Sharma took over as chief executive of Microsoft’s gaming business in February 2026, succeeding longtime Xbox head Phil Spencer. In June she circulated a memo calling for change, and on July 6, the first day of Microsoft’s new fiscal year, Microsoft announced that Xbox would cut roughly 3,200 jobs across fiscal 2027, with about 1,600 eliminated immediately and the remainder spread over the following year. Sharma called it the most significant restructure in Xbox history.

Her explanation was unusually direct. Writing to staff, she said “Our business today is not healthy,” according to Engadget’s account of the memo, and said Xbox was operating at margins three to ten times lower than comparable platform and publishing businesses. The Wikipedia summary of the year’s events describes the plan as including a pullback toward console exclusivity alongside efforts to improve financial performance for both the platform and its studios.

The July round was broad. Engadget reported that id Software, the studio behind Doom, lost a reported half of its staff, that the platform team was heavily cut, and that multiple projects appear to have been cancelled at Obsidian. The same week, Microsoft made company-wide cuts of around 4,800 jobs.

Xbox is not the only company trimming. Deadline framed the cuts as part of an industrywide recalibration as publishers adjust to the growth of casual and mobile gaming and the pressure on the traditional console franchise model. Analyst Matthew Ball’s tracking, as cited by GamesIndustry.biz, shows the games business shedding jobs every year since 2022, when studios began unwinding pandemic-era hiring. Layoffs peaked in 2024 at roughly 15,600 across the industry, eased in 2025, and have picked up again this year, with Xbox’s reset among the largest single contributors.

The pressure on the division had been building for some time. Microsoft closed its roughly $69 billion acquisition of Activision Blizzard in October 2023, the largest deal in its history, and the company had already carried out a series of gaming layoffs before this year’s reset began.

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Alongside the layoffs, the July plan set out to move five studios out of Xbox’s direct control: Arkane Studios, Compulsion Games, Double Fine Productions, Ninja Theory and Undead Labs. Tuesday’s memo updated the status of each.

Compulsion Games and Double Fine have already gone back to independent management, taking the rights to their own IP and back catalogs along with runway funding. Engadget reported in August that Double Fine let go of about a third of its staff as part of buying itself back. Undead Labs has now completed a similar transition, and Booty wrote that State of Decay 3 is still expected next year on Xbox and PC, including day one on Game Pass, as well as on PlayStation, through a new publishing partner.

The outcome for Ninja Theory is bleaker. The studio behind Hellblade and Senua’s Saga: Hellblade II had two separate agreements for its sale fall through, and Xbox will now begin consulting employees on a proposed closure while continuing to look at other options. Game Developer reported that consultation with Arkane Studios is still ongoing.

For players, none of this has yet translated into cancelled or delayed games. The July memo said publicly announced first-party projects would not be cancelled, though investment would be shifted toward higher-priority work, and Tuesday’s announcement did not change any release dates.

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The numbers in the reset are worth reading carefully. Xbox has confirmed about 1,600 immediate cuts in July and 268 on Tuesday. That adds up to fewer than 1,900 announced layoffs, well short of three-quarters of 3,200. Booty’s figure, however, explicitly counts the studio divestitures, meaning staff who left Xbox’s payroll by moving with Compulsion, Double Fine and Undead Labs are included in the progress total. A Washington state layoff filing reported in September also listed 605 local jobs, though it is not clear how that filing overlaps with Tuesday’s announcement.

Whichever way the count is done, roughly a quarter of the planned reduction remains, and the fiscal year that frames the plan runs until the end of June 2027. The brief summary that accompanied much of the coverage, that Xbox ultimately plans to cut up to 3,200 workers to improve its margins, is accurate to Sharma’s July memo. How much of the remaining quarter comes from further layoffs rather than further studio moves has not been said.

What has been said is where Halo lives now. The series that sold the first Xbox, and that made its first PlayStation appearance this summer, will next be built by a new team inside the company that makes Call of Duty, with the studio that carried it for a decade reduced to keeping the current games running.