It's The End of An Era For 'Halo' and 'Fallout' As Xbox Reshapes Studios

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Published Sep 22, 2026, 10:37 AM EDT

Patricia is the former editor-in-chief of Kotaku, where she spent a decade writing and editing. Prior to that, she served as the Culture Editor at Polygon, and as a reporter at The Verge. Hernandez specializes in Pokémon TCG, Nintendo, and offbeat internet culture stories.

Studios like Obsidian, Playground, and Turn 10 will all see major internal changes

Artwork of Halo Infinite season 3, with a variety of Spartans in armor and a large spire behind them

Five months after laying off 1,600 employees, Xbox has announced that it will continue consolidating its workforce. Xbox chief content officer Matt Booty announced Tuesday that 268 additional employees across various Xbox departments are being laid off, and a number of first-party studios will be reorganized as well.

Four major brands on Xbox will be impacted by these changes: Halo, Fallout, Forza, and Fable.

In a new blog post, Booty announced that the next Halo title will be developed by Activision. The game will be produced by a new team, but a smaller group of employees at Halo Studios will continue to offer support to the franchise as well. Activision will continue overseeing the Call of Duty franchise, Booty said.

Sea of Thieves developer Rare is also joining Activision.

What's happening with Fallout?

Obsidian, the studio best known for Fallout: New Vegas, will now operate under Bethesda. Microsoft says that Obsidian's current projects — like the next Fallout game — will continue as planned. Per earlier reports, the new Fallout game is expected to be headed by New Vegas lead director Josh Sawyer. Bethesda at large continues to focus on The Elder Scrolls 6, but the studio began pre-production on Fallout 5 earlier in 2026.

Playground and Turn 10 will fully merge together as one studio that focuses on Forza and Fable. "King will expand its remit to include Microsoft Casual Games, uniting our two global leaders in casual game design and live operations," the post continues.

Many of these changes formalize inter-studio collaborations that were already happening behind the scenes. Obsidian, for example, was developing its Fallout game in partnership with Bethesda.

Earlier this summer, Xbox divested itself from internal studios that included Compulsion Games, Undead Labs, and Double Fine. While those studios were able to retain their IP and back catalogs, the publisher just revealed that it was not able to work out an agreement with Devil May Cry studio Ninja Theory. Arkane, known for the stealth series Dishonored, is still in the middle of working out an arrangement with Xbox.

Xbox says that it will soon conduct a town hall with all of its remaining employees and studios to "reflect on our progress and look ahead to one of the strongest game lineups in our history."

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