Even earlier than the Xbox layoffs, there was ‘stress’ at Halo Studios

A minimum of 5 staff 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 individuals stay on the studio.

Staff throughout Microsoft’s Xbox division obtained an e mail from Microsoft Gaming CEO Phil Spencer Wednesday morning addressing “organizational shifts” hitting the crew over the approaching days. Halo Studios staff 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 “improve agility and effectiveness.”

“I am personally tremendous pissed that Phil’s e mail to us bragged about how this was probably the most worthwhile yr ever for Xbox in the identical breath as pulling the lever” on the layoffs, the developer instructed Engadget. “I wasn’t positive what a part of that I used to be purported to be proud about.”

Halo Studios is at the moment engaged on multiple 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 in relation to one challenge that was not too long ago in disaster, based on the developer.

“I do not suppose anyone is admittedly glad in regards to the high quality of the product proper now,” they stated. “There’s been loads of stress and pep talks making an attempt to rally people to ship.” The studio recently teased that it could reveal what it has been engaged on at this yr’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 individuals on the marketing campaign and narrative groups, together with Halo veteran Joe Staten. (That is additionally the rationale Halo: Infinite hasn’t had a seamless storyline since that point interval). As we speak, Halo Studios employs a mix of full-time staff and contractors, with junior producers and high quality assurance roles typically contracted out.

343 Industries got here beneath fireplace from followers for the launch state of Halo: Infinite, and through the years 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 stated that, since 2023, there’s been a common shift towards working with contracted studios — reasonably 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 Responsibility and Battlefield are developed.

“Xbox basically feels years behind the curve in recreation growth, and it results in loads of wasted effort and time,” the worker stated. On the similar time, a number of departing crew members have spoken warmly about their time at Halo Studios and the individuals they labored with.

The layoffs at Microsoft on July 2 affected 9,000 employees globally, together with 830 in Washington, the place Halo Studios is predicated. The Xbox division endured vital firings, recreation cancellations and studio closures. A Microsoft spokesperson stated the Xbox crew didn’t soak up the vast majority of the layoffs, however given its comparatively small dimension within the group, that framing might not precisely mirror the affect.

Underneath the Xbox banner, Uncommon’s Everwild and The Initiative’s Excellent Darkish reboot had been cancelled, and The Initiative was fully shut down. Forza Motorsport developer Flip 10 Studios reportedly misplaced a “vast majority” of its staff, 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’s being reported that veteran Uncommon designer Gregg Mayles can be gone after many years along with his crew. And to prime all of it off, Blizzard is sunsetting Warcraft Rumble.

Microsoft has more and more targeted on AI, a shift that is propelled its inventory worth to new highs. At Meta’s Llamacon in April, CEO Satya Nadella stated that as much as 30 percent of the company’s code is now written by AI. Activision in February admitted to using 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 “no longer optional” inside Microsoft.

The developer I spoke with stated, “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 staff shared their experiences on social media and spoke with varied publications. Microsoft laid off 1,900 Xbox employees in January 2024 and 650 more in September, and final yr it closed Arkane Austin, Alpha Canine Video games and Tango Gameworks (the latter of which was acquired by Krafton). Microsoft reported a internet income of $25.8 billion within the first three months of 2025, with an eight p.c yearly improve in income from Xbox content material and providers.

Microsoft instructed Engadget that the layoffs will have an effect on lower than 4 p.c of the corporate’s world workforce. An announcement 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 achievement in a dynamic market.”

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