Xbox Studios Reassigned to Activision and Bethesda as Microsoft Cuts 268 Jobs

Microsoft is overhauling the structure of its Xbox division, a move that shifts control of major franchises from the console maker to the publishers it acquired. This restructuring means that the studios behind games like Halo and Fallout will now report to Activision and Bethesda rather than Microsoft directly. For players, this signals a fundamental change in how the company manages its most valuable intellectual property.

Activision and Bethesda take over major franchises while Microsoft cuts 268 jobs

The core of the change involves folding Xbox's internal development teams into the acquired publishers. Activision will take over World's Edge, Rare, and the development of the next Halo title. Bethesda will absorb Obsidian Entertainment, which is currently building a new Fallout game. King will manage Microsoft Casual Games, including Solitaire and Minesweeper.

Microsoft is cutting 268 jobs as part of this realignment, which is part of a broader plan to reduce 3,200 roles across the fiscal year. The restructuring merges Playground Games and Turn 10 Studios into a single entity. Meanwhile, Mojang and Blizzard remain unaffected by these changes. Halo Studios will shift its focus to support roles rather than leading development.

Analyst Joost van Dreunen describes this shift as a 'reverse acquisition' where the acquired brands now drive the business. He notes that Xbox's first-party software revenue surged to $13.7 billion in 2025 after the Activision deal, overtaking third-party revenue. This financial data suggests that the acquired franchises have effectively become the business, rather than being absorbed by it.