Microsoft's Xbox Unit Cuts 268 Jobs, Realigns Studios Under Activision

Microsoft Corp.'s Xbox division is cutting 268 jobs and restructuring several of its flagship game development studios under the leadership of Activision, the *Call of Duty* publisher it acquired for $69 billion last year. The changes, detailed in a report by Bloomberg, place the future of the iconic *Halo* franchise directly under Activision's oversight.

Strategic Realignment

According to an internal note from Xbox Chief Content Officer Matt Booty cited by Bloomberg, Activision will now helm the development of the next *Halo* title. The publisher will also oversee the studios Rare, known for games like *Sea of Thieves*, and World’s Edge, the developer behind the *Age of Empires* series.

In a separate move, Microsoft’s Bethesda division is set to absorb Obsidian Entertainment. Obsidian will reportedly continue its work on the game *Grounded* and a new project in the *Fallout* universe. The existing Halo Studios will continue to operate current *Halo* games, though its staff will be impacted by the layoffs.

Context of Broader Restructuring

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These actions are part of a wider cost-cutting initiative Microsoft announced in July, which aims to eliminate a total of 3,200 positions over the next year, representing a 20% staff reduction. Booty's note indicated that the company is now approximately three-quarters of the way through completing these planned reductions.

An email to employees from Xbox Chief Executive Officer Asha Sharma, also reported by Bloomberg, provided a stark rationale for the moves, stating that "our business today is not healthy." The email reportedly noted that the Xbox division was operating at profit margins three to 10 times lower than comparable businesses.

In his communication with staff, Booty acknowledged the difficulty of the decision. "I am deeply grateful for what our colleagues have built, and I know how difficult today will be for those leaving and the teams around them," he wrote.