Microsoft has announced that Halo Studios, along with other first-party studios and management teams under Xbox Game Studios, will undergo significant layoffs, eliminating 268 positions. This comes as part of a broader restructuring effort initiated in July 2026, which impacted around 3,200 roles across the company. The changes are aimed at streamlining operations and refocusing resources on key projects. The development of the next major Halo game will now be handled by Activision, a well-known game publisher and developer. Activision's president, Rob Kostich, stated that the company is committed to creating "the best Halo game of all time, worthy of its universe and heritage." He emphasized that the team assembled for the project will be "purpose-built" for Halo, separate from Activision's ongoing work on the Call of Duty franchise. Matt Booty, Microsoft's Chief Content Officer for Xbox, confirmed that the Halo development team will be distinct from Activision's Call of Duty team. This shift marks a significant change for the Halo franchise, reminiscent of its transition from Bungie to 343 Industries in 2007. At that time, the franchise moved from one developer to another, leading to a new direction in storytelling and gameplay. Now, with Activision taking the lead, some fans are wondering if the franchise will adopt elements seen in service-based games—those that offer ongoing content and cosmetic items—similar to what Call of Duty has introduced in recent years. The announcement has generated mixed reactions online. While some are hopeful for a new direction and improved gameplay, others are concerned that Halo may lose its original identity or become more reliant on microtransactions and cosmetic items. The move underscores the evolving landscape of the gaming industry, where major studios are frequently reorganizing to adapt to changing market demands and player expectations.