Xbox Layoffs and Studio Mergers Said to be Imminent as Huge Halo Move Rumored

Published Sep 22, 2026, 5:56 AM EDT Oli Welsh has been covering the business and culture of video games for two decades. He started out writing for Edge and other publications (specializing in MMOs and Blizzard, as cover for his World of Warcraft playtime) before joining Eurogamer, where he worked for 14 years as reviews editor, deputy editor, and editor-in-chief; Eurogamer won many Games Media Awards during his tenure. At Polygon, he writes about film and TV as well as games, and provides news, analysis, and criticism on the entertainment we love and the industries that make it, all from his home in London. He loves role-playing, racing, puzzles, tactics, exploration, storytelling, Nintendo, mysteries, spies, fantasy, reality, cars, and classic cinema. He wanted to be a movie critic when he grew up, and now he’s definitely grown up, and occasionally is one. He considers this a win. Xbox's premier franchise is reportedly moving to Activision Blizzard Image: Halo Studios/Xbox Game Studios Sign in to your Polygon.com account According to a new report, Xbox will lay off "hundreds" more employees this week and announce the consolidation of several of its game studios. The report comes from well-informed tech industry publication The Information, and follows a flurry of warnings from game journalists that "bad" Xbox news was imminent. The layoffs are no surprise; in July, Xbox's new CEO Asha Sharma cut 1,600 jobs and announced that it would reduce its workforce by a total of 3,200 staff over the next year. Bloomberg's Jason Schreier recently told the 8-4 Play podcast that layoffs at Blizzard Entertainment, which was spared in the first round of job cuts, were "imminent." Xbox will consolidate game studios, according to rumors However, news of consolidation among Xbox's game studios is new. The Information offers no further detail on which studios are involved, and speculation is rife. Xbox is a huge organization; since the acquisition spree under former CEO Phil Spencer in the late 2010s and early 2020s, it comprises at least three major, operationally distinct game publishers (Xbox Game Studios, Bethesda Softworks, and Activision Blizzard, though Activision and Blizzard act as separate publishing entities). So there's plenty of room for moves. The strongest report, backed by reliable leaker NateTheHate, is that the Halo brand is to be moved under Activision Blizzard. NateTheHate said that while Halo was moving, they did not know the fate of developer Halo Studios. The suggestion is that a new developer will take over the franchise under the auspices of the Call of Duty publisher. NateTheHate said that "more than just Halo" will move to Activision Blizzard, and "other studios will move to different companies within Xbox." Another potential move is that Obsidian Entertainment will move from Xbox Game Studios to Bethesda. This is just speculation at present, but would make sense considering Obsidian is collaborating with Bethesda Game Studios on a new Fallout game. Sharma has promised a sweeping restructure at Xbox, and is said to favor a clear focus on the group's biggest franchises. According to The Information, Microsoft top brass Satya Nadella and Amy Hood have shelved the idea of carving out or selling off Xbox in favor of supporting Sharma's overhaul.