The next flagship Halo will not be made by a Halo studio. Activision is taking the franchise, along with Sea of Thieves and Age of Empires, in the restructuring Microsoft announced today.
"Activision will also be developing the next Halo title, led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty," Xbox chief content officer Matt Booty wrote in an internal memo obtained by The Verge. "A small team at Halo Studios will continue supporting the Halo community and games in-market."
What is left of Halo Studios
Read that second sentence carefully. Halo Studios keeps Halo Infinite and Halo: Campaign Evolved running, and that is the job description now. Live support for shipped titles, with the future of the series somewhere else.
The studio was also hit directly by today's 268 layoffs, which Booty's memo lists as falling across "Halo Studios, other first-party studios, and the XGS management and central functions layer."
This is the same studio that was 343 Industries, that has been through a leadership overhaul, that has had previous rounds of cuts, and that spent the last two years moving Halo development onto Unreal Engine 5. That engine migration is the detail that makes today's decision expensive. Two years of pipeline work, tooling and staff retraining was spent on a transition whose purpose was building the next Halo, and the next Halo is now being started by a different team.
Activision president Rob Kostich framed the goal in terms that will be quoted back at him: "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. It is a bold ambition, one that this franchise deserves. We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community."
Note the tense. The team is being assembled, not assembled.
Rare and World's Edge go too
Sea of Thieves moves to Activision with Rare's UK developers joining the Activision side of Xbox. World's Edge, which makes Age of Empires, is also joining. Microsoft has not said whether either studio faces layoffs as part of the move.
There is an uncomfortable bit of history here. Craig Duncan ran Rare before becoming head of Xbox Game Studios in 2024, then resigned from Microsoft in June, just ahead of the reset. Louise O'Connor, chief of staff at Xbox Game Studios, left at the same time after starting at Rare back in 1999. The two people with the deepest institutional memory of the studio now being moved both left before the move was announced.
Why this reads as a resourcing decision
Strip out the language and the logic is about capacity. Activision is the part of Microsoft that reliably ships a large annual shooter, and Microsoft has decided that capability should be pointed at Halo as well, with a separate team so Call of Duty is not disturbed.
That may work. Activision knows how to run big first-person shooter production at scale, which Halo Studios has arguably not demonstrated recently. What Activision has not demonstrated is Halo, a series whose appeal rests on sandbox encounter design and a specific handling feel rather than on annual iteration. Building a new team to make the greatest Halo ever is a bigger ask than moving a logo between org charts.
The pattern of handing a beloved series to a different studio has recent precedent that cuts both ways. CD Projekt's producers have been openly nervous about passing an expansion to another team, and Playground's director argued that killing Fable would mean killing a piece of Xbox, which is the sort of institutional attachment that does not survive a reorganisation. On the other side, Bungie's Marathon director spent this year insisting the studio was not merging that game with Destiny 2, a reminder that publishers announce structural certainty right up until they announce the opposite.
For players the practical answer is that nothing changes soon. Halo Infinite and Campaign Evolved keep their support, and a team that is still being hired has not started the game that follows.