No less than 5 workers at Halo Studios have been fired as a part of company-wide layoffs at Microsoft on Wednesday, based on a developer with information of the state of affairs. An estimated 200 to 300 folks stay on the studio.
Workers throughout Microsoft’s Xbox division obtained an electronic mail from Microsoft Gaming CEO Phil Spencer Wednesday morning addressing “organizational shifts” hitting the crew over the approaching days. Halo Studios workers who had been laid off obtained a further invite to a gathering with group leaders, and two (very lengthy) hours later, the Groups name started. Amid discussions of severance packages, the explanations offered for the firings aligned with Spencer’s memo — to “enhance agility and effectiveness.”
“I am personally tremendous pissed that Phil’s electronic mail to us bragged about how this was probably the most worthwhile 12 months ever for Xbox in the identical breath as pulling the lever” on the layoffs, the developer advised Engadget. “I wasn’t certain what a part of that I used to be imagined to be proud about.”
Halo Studios is at the moment engaged on a number of video games, together with the following mainline Halo installment, and it is the steward of Halo: Infinite, which is quietly spinning down its content material cadence. The temper on the studio is tense, particularly relating to one challenge that was lately in disaster, based on the developer.
“I do not suppose anyone is admittedly comfortable in regards to the high quality of the product proper now,” they mentioned. “There’s been lots of stress and pep talks making an attempt to rally of us to ship.” The studio lately teased that it could reveal what it has been engaged on at this 12 months’s Halo World Championship in October.
Halo Studios was rocked by layoffs in 2023, again when it was nonetheless known as 343 Industries, and that culling principally affected folks on the marketing campaign and narrative groups, together with Halo veteran Joe Staten. (That is additionally the explanation Halo: Infinite hasn’t had a unbroken storyline since that point interval). As we speak, Halo Studios employs a mix of full-time workers and contractors, with junior producers and high quality assurance roles usually contracted out.
343 Industries got here beneath hearth from followers for the launch state of Halo: Infinite, and over time a number of ex-employees have spoken out about the studio’s reliance on contractors, who usually work with the corporate for a most of 18 months.
The worker I spoke with mentioned that, since 2023, there’s been a normal shift towards working with contracted studios — somewhat than particular person contractors — in the USA and Europe to hurry up Halo manufacturing. This mirrors the way in which different main FPS franchises like Name of Obligation and Battlefield are developed.
“Xbox basically feels years behind the curve in recreation improvement, and it results in lots of wasted effort and time,” the worker mentioned. On the identical time, a number of departing crew members have spoken warmly about their time at Halo Studios and the folks they labored with.
The layoffs at Microsoft on July 2 affected 9,000 workers globally, together with 830 in Washington, the place Halo Studios is predicated. The Xbox division endured important firings, recreation cancellations and studio closures. A Microsoft spokesperson mentioned the Xbox crew didn’t take up nearly all of the layoffs, however given its comparatively small dimension within the group, that framing might not precisely replicate the affect.
Underneath the Xbox banner, Uncommon’s Everwild and The Initiative’s Good Darkish reboot had been cancelled, and The Initiative was absolutely shut down. Forza Motorsport developer Flip 10 Studios reportedly misplaced a “overwhelming majority” of its workers, and Uncommon, ZeniMax On-line Studios, King, Raven, Sledgehammer Video games and Halo Studios have all reportedly been affected. ZeniMax president Matt Firor is out after 18 years main the studio, and it is being reported that veteran Uncommon designer Gregg Mayles can be gone after many years along with his crew. And to high all of it off, Blizzard is sunsetting Warcraft Rumble.
Microsoft has more and more centered on AI, a shift that is propelled its inventory value to new highs. At Meta’s Llamacon in April, CEO Satya Nadella mentioned that as a lot as 30 p.c of the corporate’s code is now written by AI. Activision in February admitted to utilizing AI in Black Ops 6. It is unclear how a lot AI has to do with this newest spherical of layoffs, however use of Copilot is “not non-compulsory” inside Microsoft.
The developer I spoke with mentioned, “They’re making an attempt their damndest to exchange as many roles as they will with AI brokers.”
Information about particular Xbox groups popped up all through the day as workers shared their experiences on social media and spoke with varied publications. Microsoft laid off 1,900 Xbox workers in January 2024 and 650 extra in September, and final 12 months it closed Arkane Austin, Alpha Canine Video games and Tango Gameworks (the latter of which was acquired by Krafton). Microsoft reported a web income of $25.8 billion within the first three months of 2025, with an eight p.c yearly enhance in income from Xbox content material and companies.
Microsoft advised Engadget that the layoffs will have an effect on lower than 4 p.c of the corporate’s international workforce. A press release from a Microsoft spokesperson reads as follows: “We proceed to implement organizational and workforce modifications which are essential to place the corporate and groups for fulfillment in a dynamic market.”
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