Microsoft just revealed another round of "restructures" for Xbox and its game studios, with Ninja Theory, Obsidian, Turn 10, Halo Studios, and others impacted in various ways.
Last July, Microsoft announced it would be looking to reduce its gaming workforce by around 3,200 staffers. Sources suggest that the total figure will fall short of that previous estimate, as Microsoft opts for restructuring and moving employees around to other departments as much as possible.
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One way Microsoft has sought to achieve some of this is via divestitures. Double Fine and Compulsion have both returned to being independent game studios, for example, with the former starting a Kickstarter to fund its next title. Undead Labs of State of Decay fame is also moving to another publisher, although it has not been revealed exactly who this is just yet. Discussions around the future of Arkane are still ongoing.
Unfortunately, Microsoft revealed today that two previous attempts to divest Ninja Theory of Hellblade fame have fallen through. Microsoft has entered into redundancy consultations with the UK government as a result, per local law. Sources say Microsoft is still trying to find a buyer for Ninja Theory and the Hellblade franchise, but it's still looking a bit bleak.
Furthermore, Halo Studios is also looking at major layoffs in the 100s, as Microsoft seeks a major restructure to the way Halo is run.
In its heyday, Halo was a cultural phenomenon. It turbo-charged the Xbox platform, giving Microsoft's incumbent console a strong basis for growth in a market dominated by Nintendo and PlayStation. Halo 2 and 3 sent the platform even higher, and defined a new era of console-oriented first-person shooters. Those times are well and truly behind it, though.
Through years of mismanagement, Halo is now a shadow of its former self. A disastrous TV show, and two previous games that arguably missed the mark in different ways, Halo Studios' most recent outing (yet another remaster of Halo Combat Evolved) also received mixed reviews from fans and critics for various reasons.
Microsoft announced that it is effectively downsizing Halo Studios into the franchise's production and administration arm, and will place stewardship of the franchise under Activision — confirming some vague industry rumors I'd heard over the summer. Microsoft says around 230 roles will be lost as a result.
We’re thrilled to welcome Halo, Rare, and World’s Edge to Activision. It’s an honor and a responsibility that we do not take lightly. These teams and their games have inspired fans around the world for decades. For Halo, our goal is clear: make the greatest Halo game ever, worthy of its universe and legacy, while staying true to what made players love it in the first place. It is a bold ambition, one that this franchise deserves. We have already begun assembling a purpose-built team, unique in capability and talent, ready and excited to deliver this next chapter with the community. To the World’s Edge and Rare teams, we can’t wait to get to work together.
Activision
Exactly which Activision studio will handle Halo going forward remains to be seen, but it's certainly true that Activision's Call of Duty teams have had far more success than Halo Studios has at building broadly appealing live service shooters.
Furthermore, Microsoft is also placing Rare and Sea of Thieves under Activision too, with Obsidian and Grounded moving under ZeniMax to work more closely with Bethesda Softworks on Fallout. World's Edge and the Age of Empires franchise will also move under Activision. Xbox Game Studios will remain as Playground (which is absorbing Turn 10), The Coalition, InXile, and Xbox's publishing arm, handling games like Hideo Kojima's PHYSINT.
A new dawn for Halo?
The job losses at Xbox have been regrettable over the summer, but it's hard to overlook the fact that in order to have a sustainable business ... games need to actually sell. Whether it's small and quirky projects like Keeper or mismanaged live service ops like Halo Infinite, Microsoft hasn't exactly handled its portfolio effectively in recent years. There's less free time and money for gaming among consumers, and more competition than ever, making the stakes higher than they likely were previously.
Microsoft has seen some big success stories. Minecraft is bigger than ever, as is Forza Horizon, Flight Simulator, Age of Empires, and Blizzard has well and truly thrived in its post-Activision era. Microsoft wants to double down on the bigger opportunities like Fallout and The Elder Scrolls, building TV and movie adaptations for its bigger properties like Diablo and Overwatch.
There's also a corporate structural issue here that Microsoft is looking to address. Moving some of its game teams out from the Microsoft umbrella also moves employees out from under Microsoft's bureaucracy and corporate structure, potentially reducing overheads and costs.
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Halo Studios' proximity to Microsoft HQ, I've heard, has long been a source of corporate inertia and cost bloating — which is absolutely no fault of the employees working there. Those employees and projects also have to deal with A.I. money inflating wages of software engineering-adjacent professions, making some game projects unsustainable purely on the basis of the A.I. bubble. It's a weird economy right now.
As for Halo and other games, it remains to be seen if the restructure will actually lead to higher quality products. Halo fans have been long-suffering, waiting years upon years for a truly consistent delivery schedule for the franchise. I've often wondered myself what an Infinity Ward-led Halo might look like ... perhaps we'll find out exactly what that'll be like in the coming years.
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