Activision will take control of the Halo franchise as part of a massive reorganization across Microsoft’s struggling Xbox division.
The Call of Duty publisher will assemble a new team specifically to develop the next major Halo game. Meanwhile, Halo Studios will be reduced to supporting titles already on the market.
“Activision will also be developing the next Halo title, led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty,” Xbox chief content officer Matt Booty announced.
“A small team at Halo Studios will continue supporting the Halo community and games in-market,” he added.
The decision effectively ends Halo Studios’ tenure as the franchise’s primary developer. The company previously operated as 343 Industries before adopting its current name in 2024.
Microsoft stressed that the new Activision team will operate separately from the developers working on Call of Duty. However, the company did not identify the team’s leaders or provide a timetable for its first release.
Halo Studios Sidelined After Campaign Evolved
Microsoft’s decision follows years of controversy and inconsistent results under 343 Industries and Halo Studios.
The company’s most recent release, Halo: Campaign Evolved, rebuilt the original Halo: Combat Evolved campaign in Unreal Engine 5. However, the remake launched without competitive multiplayer and failed to attract a substantial Steam audience.
Campaign Evolved peaked at only 25,376 concurrent Steam players shortly after its July launch. That was far below the 272,586-player peak recorded by Halo Infinite and the 161,024-player peak for The Master Chief Collection.
Steam data for Halo: Campaign Evolved – SteamDB
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The remake also faced complaints about technical problems, character changes, and the decision to omit one of the franchise’s most important features.
Activision’s involvement hardly guarantees a return to form. However, Microsoft has evidently concluded that its current approach to the franchise is no longer working.
The transfer also marks the end of an era that began when 343 Industries assumed control of Halo from Bungie. After approximately 15 years, Microsoft’s dedicated Halo studio will no longer develop the franchise’s next flagship installment, leaving Activision responsible for restoring one of Xbox’s most important properties.
Activision Expands Its Role Within Xbox
The Halo transfer is only one component of a much larger Xbox shake-up.
Activision will also oversee Rare and World’s Edge, the studios associated with Sea of Thieves and Age of Empires. Bethesda will assume responsibility for Obsidian, which is collaborating with Bethesda Game Studios on a new Fallout project.
The main character in Fable – YouTube, GameSpot
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Microsoft is also combining Playground Games and Turn 10 into a single studio responsible for the Forza and Fable franchises. King, best known for Candy Crush, will oversee Microsoft’s casual games division.
Layoffs and Potential Studio Closures Continue
The company eliminated another 268 positions across Halo Studios, other first-party developers, and Xbox management. Booty said Microsoft has now completed approximately three-quarters of its previously announced restructuring.
Microsoft also confirmed that two proposed deals to separate Ninja Theory from the company fell apart. Xbox will now consult employees about potentially closing the Hellblade developer while continuing to explore alternatives.
A screenshot from Halo 2: Anniversary (2020), 343 Industries
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Compulsion Games, Double Fine, and Undead Labs have already separated from Microsoft under similar agreements. Each studio departed with its intellectual properties, back catalog, and financial support.
Transferring Xbox’s signature franchise to Activision is perhaps the clearest admission yet that Microsoft’s previous Halo strategy failed. The next game must now accomplish something Halo Studios could not: restore Master Chief to the center of modern gaming.
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