Microsoft’s massive wave of layoffs has reportedly reached Halo Studios, the team behind the legendary Halo franchise, marking another chapter in the tech giant’s move toward contracted game development. The decision reflects a broader trend in the industry where major publishers reduce in-house staff and increasingly rely on external or temporary studios.
A report from July 2 confirmed that Microsoft had laid off up to 9,000 employees, representing about 4% of its global workforce. Industry insiders suggested that up to 2,000 of those cuts were from the company’s gaming division, with studios under the Xbox Game Studios umbrella among the hardest hit.
According to Engadget, Halo Studios—previously known as 343 Industries—was not spared. A developer from the team reported that at least five employees had been terminated during the layoffs. The source also noted growing internal tension, pointing out that Xbox had already been shifting to a contract-based development model for Halo since 2023. This marks a significant departure from the traditional approach of in-house game development that Halo fans have come to expect.
The restructuring aligns with how other major franchises like Call of Duty operate—using a hybrid model of full-time developers and contracted studios. Ironically, even Call of Duty developers such as Raven Software and Sledgehammer Games were reportedly affected by similar layoffs, underscoring the industry’s widespread volatility.
While Microsoft is a tech behemoth with interests far beyond Xbox, its most iconic franchises—like Halo—are clearly feeling the pressure. The long-term impact on the franchise remains uncertain, but this shift could lead to outsourced content updates, multiplayer support, and campaign development in the future.
As the gaming industry grapples with ongoing economic pressures, fans and industry professionals alike are watching closely to see how these structural changes affect the future of their favorite series—especially one as foundational to Xbox as Halo.