Xbox Cuts Halo Studios, Activision Takes Over Next Game

Xbox is cutting 268 jobs, with developer Halo Studios heavily impacted. In a memo from executive vice president Matt Booty, the company stated that only a "small team" will remain to support existing Halo games, while the next major title will be developed by Activision, the studio behind Call of Duty. The news signals a profound shift for the flagship Xbox franchise.

This restructuring represents a symbolic conclusion to one of gaming's long-standing fanbase rivalries. For over two decades, Halo was the face of Xbox. The original Halo: Combat Evolved from Bungie in 2001 was the console's killer app. Its sequels, Halo 2 and Halo 3, are still hailed as genre classics.

The Rocky Road of 343 Industries

After Bungie's departure, Microsoft formed 343 Industries to steward the series. Its tenure was marked by high ambition and troubled launches. Halo 4 divided the fanbase. The Halo: Master Chief Collection required years of patches to become stable. Halo 5: Guardians was widely criticized for leaning too heavily into Call of Duty's design language.

The studio's biggest bet was Halo Infinite, planned as a decade-long platform. It launched in 2021 as a free-to-play multiplayer game with a paid campaign. Despite a massive launch of 20 million players, it lacked core features like campaign co-op at release. Player retention plummeted. Active development on Infinite ended earlier this year.

Engine Troubles and a Faithful Remake

Part of the studio's challenge was maintaining its proprietary Slipspace engine while also making games. One developer likened it to building a railroad while operating the train. In 2025, the studio rebranded to Halo Studios and announced a move to Epic's Unreal Engine.

The first fruit of that shift was Halo: Campaign Evolved, a faithful remake of the original game released this summer. It modernized elements like adding a sprint button but was notably the first main Halo game to launch without a multiplayer component. At the time, Halo Studios said it had "multiple" other projects in development.

Activision's Call of Duty Influence Looms

The status of those internal projects is now unclear. Booty's memo confirms Activision will build the next Halo game with a new team separate from its Call of Duty studios. While Treyarch, Infinity Ward, and Sledgehammer Games won't directly lead it, their influence is expected.

Call of Duty's hallmarks include annualized releases, tight seasonal models, and specific progression systems. The source notes that Halo has historically stumbled when it tried to emulate its rival, as seen with Halo 4's loadouts. With Halo: Campaign Evolved, the studio proved Halo's distinct feel could be recreated in Unreal Engine. Yet, observers worry the series may adopt more Call of Duty conventions, potentially losing its identity.

An Ironic Handover for the Franchise

The handover is deeply ironic. Halo was once positioned as the cerebral counterweight to Call of Duty's straightforward action. The series found its greatest success by sticking to its own fundamentals, as Halo Infinite's record launch demonstrated. Now, the future of Master Chief rests with the house of his old rival. For a franchise defined by its community, the biggest question is whether anything distinct will remain to debate.