Yesterday, Xbox announced the next stage in its ongoing major restructuring, consolidating several studios and laying off another 268 as it works its way toward a planned total of around 3200 job cuts in the space of a year. Halo has been handed off to Activision as Halo Studios shrinks to support size, Rare and Age of Empires developer World’s Edge are also under the Activision banner now, Obsidian is moving under Bethesda, Turn 10 and Playground are merging, and Ninja Theory is entering consultation.
Joost van Dreunen, NYU Stern professor and author of SuperJoost Playlist, is calling it “a reverse acquisition in slow motion.”
“The publishers Xbox spent a fortune acquiring are now absorbing the studios Xbox built,” he wrote yesterday.
I reached out to my usual cadre of analysts in the wake of this news to ask them what they make of this massive shake-up, and received back a series of emails full of deep concern, but little surprise.
Both head of market analysis at Alinea Analytics Rhys Elliot and Omdia senior analyst James McWhirter brought up what they saw as Xbox’s identity crisis, with Elliott noting that Xbox has swapped roles to become a publisher first and a platform second, and McWhirter seeing it more as Xbox feeling pulled in both directions.
“It still wants to be a console platform holder, yet its expanded remit as a multiplatform publisher has weakened its ability to compete with Sony and Nintendo on the same level,” McWhirter said. “Game Pass was meant to broaden the audience, but it instead diverted spend away from upfront purchases toward subscription revenue.
“Put simply, its first-party portfolio hasn’t reached the potential Xbox would like it to because of its many conflicting objectives.”
Even so, several of the analysts I spoke to saw some logic in some of the combinations, with both Elliott and Newzoo director of market intelligence Manu Rosier noting that a number of the smaller studios have been folded in with larger studios working in the same genre. “Activision leads shooters, Bethesda leads role-playing games, King leads casual, and Playground leads racing,” Rosier said. “One leadership per genre can plan releases across all its games. That can stop Microsoft titles from competing with each other for the same players and avoid gaps in the calendar.
“Newzoo data shows why: since January 2025, players of Obsidian’s Avowed and The Outer Worlds 2 were more than three times more likely than average to also play Bethesda’s Starfield or The Elder Scrolls IV: Oblivion Remastered. Yet Avowed and The Elder Scrolls IV: Oblivion Remastered launched just two months apart in 2025. Newzoo data shows PC and console playtime was flat in 2025. New games mostly take time away from existing ones. In a market this competitive, it makes sense to place fewer bets, each made by the most experienced team.
“Ubisoft and Electronic Arts made similar moves. Ubisoft regrouped its studios into five genre-based Creative Houses in January 2026, and Electronic Arts brought four studios, including Criterion and Motive, under a single Battlefield Studios banner in 2025.”
“Essentially a demotion”
Like with the other shifts, some of the analysts see some silver linings to Activision taking on Halo. “The upshot of today’s announcement is that Activision is absorbing Xbox rather than the other way around,” van Dreunen said. “Halo, Rare, and World’s Edge now report to Rob Kostich, which means Microsoft’s most iconic franchise, its longest-held British studio, and its flagship RTS all sit inside the publisher it paid $69 billion for three years ago. Reducing Halo Studios to a support team ends a fifteen-year experiment in in-house stewardship and is a plain admission that it didn’t work, so the bet now is that the Call of Duty machine can do for Halo what it does every year for its own franchise.”
Rosier seems to agree, and suggests that Halo and Call of Duty could “take turns.”
“Shooters are more competitive than ever. Newzoo data shows their share of PC and console playtime fell from 39.6% to 34.8% in 2025, with both Fortnite and Call of Duty declining. That puts pressure on Call of Duty‘s annual release. Halo can relieve some of it because it reaches different players: since January 2025, fewer than 3% of Call of Duty players also played Halo Infinite.
“Halo has never run on an annual cycle, and its last two mainline games launched six years apart. Now it sits under the leadership that ships Call of Duty every year. One possible scenario: Halo and Call of Duty alternate years, so Call of Duty no longer carries Microsoft’s shooter slot alone every year.”
However, in Rosier’s opinion, Rare and World’s Edge feel like odd ones out. “Sea of Thieves and Age of Empires sit outside Activision’s shooter portfolio, and genre does not explain the move. It is the one part of the regrouping without a clear genre logic, which makes it the move to follow.”
Elliott had even less optimism about this particular change.
“Handing Halo to Activision and cutting Halo Studios down to a support team is essentially a demotion. It’s wild, as Halo was the franchise that sold Xboxes. In our data the Campaign Evolved remake landed respectably but nowhere near what Halo used to mean. But part of that is because of the lack of online multiplayer.
“Rare and World’s Edge is about publishing muscle, not creative fit. Sea of Thieves and Age of Empires have nothing in common with Call of Duty except they now sit under the group Xbox trusts to operate at scale.”
“Success is not guaranteed”
Everyone I spoke to had less to say about Ninja Theory, likely due to the obscurity around what had actually happened with the two deals for the studio that fell through. Rosier posited that “investors may be wary of single-player games with a niche audience.”
And van Dreunen put it this way:
“The Ninja Theory situation is the most troubling item. When two sale agreements collapse for the studio behind Hellblade, it tells you the 2018 acquisition spree bought talent that turns out to be hard to sell and expensive to keep. It’s a costly lesson and one I hope Xbox and its peers will remember during the next cycle. As I’ve mentioned previously, Asha Sharma is working to make Xbox smaller. She is reducing the number of studios, removing management layers, and delegating responsibility for franchises to whichever label has a record of shipping on schedule.”
I did speak to one other analyst on this subject overall: Dr. Serkan Toto of Kantan Games. He was unsurprised when I emailed him. “I already predicted earlier this year Asha will run through the Xbox business like a bulldozer, and sadly, this has now become reality.”
Toto brought up several major concerns he has about the move overall. He’s worried that studios “might lose their identity and soul” by merging with others, such as Halo with Activision or Obsidian with Bethesda. And he’s worried this reorganization will better enable Sharma to sell off studios or disband them if things don’t go well…which, they very well may not. “Success is not guaranteed,” he said. “If this restructuring does not work, we might look at even more pain in the years going forward.”
“One thing is clearer than ever: Project Helix must absolutely hit,” he concludes.
