Xbox Restructuring Update: 268 Roles Cut as Matt Booty Maps Studio Consolidation

Microsoft Xbox head Matt Booty has sent a detailed internal memo to Team XBOX employees outlining the latest phase of the division’s reset. The message confirms 268 roles are being eliminated across Halo Studios, other first-party studios, and the XGS management and central functions layer. Combined with actions completed since July and recent studio divestitures, the company says it has cleared roughly three-quarters of the previously announced restructuring.

The memo balances operational clarity with empathy, acknowledging the difficulty for departing colleagues while framing the changes as a deliberate push toward fewer, stronger business units.

The Scale of Xbox’s Latest Workforce Reduction

Booty writes that the cuts span Halo Studios, additional first-party studios, and the XGS management and central functions layer. He notes that inclusive of studio divestitures, the actions taken since July bring the organization roughly three-quarters of the way through the restructuring plan announced earlier in the year. The tone is candid: he recognizes the impact on those leaving and the teams supporting them.

New Studio Structure: Fewer Business Units, Stronger Franchises

The reorganization consolidates studios into fewer units designed to align groups that already collaborate closely and concentrate publishing expertise. Four major shifts define the new map:

Activision Expands to Halo, Rare, and World’s Edge

Activision’s remit grows to include World’s Edge and Rare, and the division will develop the next Halo title through a new, purpose-built team separate from ongoing Call of Duty work. A small Halo Studios team will remain to support in-market community and games.

Bethesda Absorbs Obsidian and Greenlights New Fallout

Bethesda expands to include Obsidian, which continues projects such as Grounded alongside a new Fallout title developed with Bethesda Game Studios.

King Merges with Microsoft Casual Games

King absorbs Microsoft Casual Games, pairing the two largest global leaders in casual game design and live operations under one umbrella.

Playground and Turn 10 Unite for Forza and Fable

Playground Games and Turn 10 formally merge into a single studio focused on the Forza and Fable franchises, codifying a creative partnership that has spanned more than a decade.

Divestitures and Studio Closures: Ninja Theory, Arkane, and Others

The divestiture update offers mixed outcomes. In August, Compulsion Games and Double Fine returned to management with their IP, back catalogs, and runway funding. Undead Labs completed a similar transition and, with a new publisher, plans to release State of Decay 3 day one on Game Pass.

However, two separate agreements for Ninja Theory collapsed, prompting Booty to announce consultation with employees on a proposed closure while exploring alternative paths. Arkane’s consultation remains underway and is expected to continue through the end of the year.

Compulsion, Double Fine, and Undead Labs Transition Details

The August transitions returned intellectual property and back catalogs to management, with Undead Labs securing a publishing path for State of Decay 3 via Game Pass.

Ninja Theory Closure Talks and Arkane’s Pending Decision

Failed negotiations for Ninja Theory have triggered employee consultation on closure, while Arkane’s future remains under discussion heading into year-end.

What the Xbox Reset Means for Gamers and the Industry

Booty closes by urging colleagues to support affected employees and treat one another with care. He promises to spend time in studios over the coming week and signals an October 6 town hall where the ALL-XBOX team will review progress and preview what he calls one of the strongest game lineups in the division’s history.

For players, the reorganization signals a more concentrated Xbox portfolio: fewer studios, clearer franchise ownership, and a publishing structure built around Activision, Bethesda, King, and the merged racing teams. Whether that concentration translates into stronger releases remains to be seen, but the internal roadmap is now set.

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