Microsoft confirmed 268 layoffs across Xbox and proposed closing Ninja Theory, while transferring the Rare and Halo franchises into Activision's publishing operation.

The cuts form part of a sweeping reorganisation of Microsoft's internal studios. Microsoft framed the move as structural consolidation rather than divestment.

Which studios are affected?

The restructure touches three named UK-based groups:

• Ninja Theory faces proposed closure. The Cambridge studio shipped Hellblade II: Senua's Saga on 21 May 2024 and had been working on Project Mara, an experimental horror title previewed at Xbox events.
• Rare moves to Activision's organisation. The studio's portfolio, including Sea of Thieves and the recently concluded Everwild development, now sits outside Xbox Game Studios.
• The Halo IP transfers to Activision. Master Chief stays an Xbox asset; production responsibility shifts to the publisher that already runs Call of Duty, Diablo, and Candy Crush under the Microsoft umbrella.

Microsoft has not released severance terms, retention offers, or facility-level impact figures for the affected roles. The company has also declined to specify the full list of studio locations touched by the reorganisation.

What's the strategic logic?

The consolidation follows Microsoft's $68.7 billion Activision Blizzard acquisition, which closed in October 2023. With the deal now in its second full year of integration, Microsoft is reorganising its gaming division around a publisher-led structure.

For Rare, the placement reframes the studio's roadmap as supporting Activision-adjacent live-service work rather than operating as a standalone Xbox first-party label. The studio had narrowed its mandate over recent years following management changes and project cancellations.

For Halo, the transfer centralises ongoing Master Chief, multiplayer, and live-service maintenance under the team that runs Call of Duty's live operations. The move repositions Halo Studios' output under Activision's publishing leadership.

Ninja Theory's proposed closure marks the highest-profile studio-level cut in this round. Hellblade II generated mixed critical reception but served as a flagship title for Microsoft's single-player narrative strategy. Project Mara now sits in limbo pending the closure consultation.

What happens next?

The Ninja Theory closure opens a UK statutory consultation period. Microsoft has not indicated a target completion date.

Watch for:

• The Ninja Theory consultation outcome, due within 45 days under UK employment law
• Microsoft's FY25 Q2 earnings call, scheduled late January 2025, for confirmation of gaming division cost-base changes
• Any further headcount actions across the wider Xbox organisation

This confirms the second round of Xbox layoffs in 2024, following earlier cuts across the division.

The 268 confirmed cuts land against an industry backdrop of publisher consolidation. Sony, EA, Take-Two, and Embracer Group have all announced headcount reductions or restructurings through 2024, reflecting a broader shift from post-pandemic expansion to cost discipline.

The reorganisation signals that consolidation, not expansion, remains Microsoft's gaming priority through the first half of 2025.