Major staff cuts at former 343 Industries and other teams; consultation begins at Ninja Theory; Obsidian transferred to Bethesda, buyer found for Undead Labs
Image credit: Xbox News by Jon Hicks Editorial Director Published on Sept. 22, 2026, 2:06 p.m. Updated on Sept. 22, 2026, 4:33 p.m. Follow Xbox Game Studios Original story: Xbox has transferred legendary UK studio Rare and ownership of the Halo franchise to Activision, announced the imminent closure of Ninja Theory, and enacted sweeping cuts at Halo Studios. The news was announced via an Xbox Wire post this morning, and followed earlier reports of planned layoffs .
In the blog post, the company said that attempts to sell Ninja Theory had failed, and it was beginning a consultation process on its proposed closure. The firm said: "Undead Labs has now successfully transitioned on similar terms and, with a new publisher, will release State of Decay 3 day one on Game Pass."
Microsoft said that the next Halo title would be "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. A small team at Halo Studios will continue supporting the Halo community and games in-market."
"Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward. Consultation with Arkane remains underway and is expected to continue through the end of the year."
Today's news is the latest in the firm's ongoing restructuring as part of what CEO Asha Sharma has termed a " resetting of the business ". This has included the divestment of five studios including Ninja Theory and Undead Labs, with Compulsion Games and Double Fine regaining independence in the last month, and sweeping layoffs across the organisation worldwide, with recent deep cuts at Zenimax Online Studios and id .
Rare, founded in 1985 and part of Xbox since 2002, currently maintains online pirate game Sea of Thieves, but its most recent new release Everwild was cancelled amid major Xbox cuts in 2025 . Halo Studios was launched as 343 Industries in 2007, but rebranded in 2024 and shipped Halo: Campaign Evolved earlier this year. Ninja Theory is currently working on Senua.
Halo Studios' most recent release was July's Halo: Campaign Evolved, a remake of the single-player element of 2001's Halo: Combat Evolved. That title received generally favourable reviews but was Halo Studios' first release since 2021's Halo Infinite, which had an extended and troubled development process that was attributed to difficulties with its in-house Slipspace engine amid allegations of poor management . Several senior figures departed following that game's release, many more were subsequently made redundant during major staff cuts in 2023, and the studio announced a switch to Unreal Engine and a rebranding as Halo Studios in 2024.
At the time, Xbox said Halo Studios was working on "multiple new experiences" enabled by the shift to the Unreal platform, but Campaign Evolved was the only project announced.
Microsoft said that the next Halo title would be "led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. A small team at Halo Studios will continue supporting the Halo community and games in-market."
Last week, Call of Duty mainstay Treyarch announced it would be " moving on to something new " after it completed work on the most recent Black Ops title; Act…