Microsoft Xbox is undergoing a major restructuring that has led to layoffs across several of its game studios, including Hellblade developer Ninja Theory. The studio is reportedly being closed after Microsoft failed to find a new owner for it twice. Employees have started receiving layoff notices, with some confirming they are losing their jobs. Many expressed disappointment over unfinished projects. One upcoming Hellblade game, Senua, which was announced in June 2026 for a 2027 release, may not be developed if the studio shuts down. Katrin Mair, a gameplay programmer at Ninja Theory, shared her sadness over not being able to complete her work on Senua, highlighting the passion and effort that had gone into the project. Loong-Wei Ding, the technical director, and Alessio Mellina, a technical sound designer, are among those facing potential layoffs. Mellina had worked on the binaural audio system that made Hellblade stand out with its immersive sound. Xoe Suvari, a motion capture expert, was also let go, showing how widespread the layoffs have become. As part of the restructuring, Microsoft is transferring the Halo franchise to Activision. Activision will create a dedicated team for Halo, separate from its Call of Duty games. The Halo Studios team will be downsized to focus on supporting existing games. Other studios like Rare, known for Sea of Thieves, and World's Edge, the developer of Age of Empires, will also move under Activision. Obsidian Entertainment, which makes Grounded and The Outer Worlds, has joined Bethesda and is working on a new Fallout game. Turn 10 Studios and Playground Games are merging to focus on the Forza and Fable franchises. Meanwhile, Undead Labs, known for State of Decay, is regaining independence, although State of Decay 3 is still planned for release on Game Pass. Microsoft has confirmed the elimination of 268 more positions as part of the restructuring. Matt Booty, Xbox's head of content, said these changes are part of a larger reorganization plan, and more layoffs could happen in the months ahead.