Xbox is not done bleeding jobs. Microsoft's gaming arm confirmed Tuesday it is eliminating 268 more roles across Halo Studios, other first-party teams and central management functions — the latest tranche of a brutal, year-long overhaul that has now claimed roughly three-quarters of a previously announced 3,200-job reduction plan.

The cuts landed alongside a bombshell for gamers: Halo, the 25-year-old franchise that built the Xbox brand, is being stripped from its dedicated studio and handed to Activision — the "Call of Duty" powerhouse Microsoft absorbed in its $68.7 billion Activision Blizzard acquisition. Xbox content chief Matt Booty laid out the shakeup in an Xbox Wire post titled "Continuing Our Reset," saying a newly formed team inside Activision — kept separate from Call of Duty's own pipeline — will build the next Halo title, while only a skeleton crew remains at Halo Studios to keep existing games running.

A division still "not healthy"

Tuesday's cuts are the latest aftershock of a July memo, bluntly titled "Resetting Xbox," in which new Microsoft Gaming chief Asha Sharma told staff "our business today is not healthy" and unveiled plans to cut roughly 3,200 roles — about a fifth of the division — while shedding four studios entirely. That reset has been driven in part by an AI-fueled memory-chip shortage squeezing console production costs and by the ballooning economics of Game Pass, on top of the debt-fueled Activision deal Microsoft is still digesting.

Alongside Halo's move, Microsoft is consolidating its stable further: Activision now also oversees Age of Empires studio World's Edge and Sea of Thieves maker Rare, while Playground Games and Turn 10 are merging into a single studio focused on Forza and Fable, and Bethesda is absorbing Obsidian. Bloomberg reported the moves amount to a wholesale rewiring of who makes Microsoft's biggest games, not just a headcount trim.

"A small team at Halo Studios will continue supporting the Halo community and games in-market," Booty wrote, confirming the storied studio's diminished role going forward.

Industry outlets including Variety and the Washington Post framed the reorganization as confirmation that Microsoft is folding its console-era studio identities into a leaner, franchise-first structure built around its acquired Activision Blizzard assets — a strategy with real stakes for thousands of developers whose jobs now hinge on which studio Redmond decides still deserves its own name.

Microsoft has not said whether further cuts are coming once the current 3,200-role target is reached, leaving Xbox's remaining workforce bracing for more restructuring news in the months ahead.