Halo Studios Reportedly Hit by Microsoft Layoffs in Move Toward Contracted Studios

Microsoft’s massive layoffs have reportedly hit the team behind Halo amid a shift toward contracted studios. Mass firings and closures have been a persistent trend across the gaming industry over the past few years, and even the world’s largest games publisher isn’t immune. While Microsoft covers much more than just Xbox, many of its most iconic franchises, including Halo, are feeling the effects.

A July 2 report suggested that Microsoft planned to lay off up to 9,000 people, or roughly 4% of its global workforce, which eventually came to pass later that day. Previous claims from industry insiders have said that the firings could affect up to 2,000 employees within the company’s gaming division, and several Xbox-owned studios have since confirmed cutbacks among their staff. Now, Halo Studios, formerly 343 Industries, has reportedly joined the growing list.

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Forza Motorsport Developer Reportedly ‘Bracing’ for Layoffs

Turn 10 Studios, one of Xbox’s oldest first-party teams and the custodian of the Forza Motorsport series, is reportedly in line for imminent layoffs.

A reported developer at Halo Studios spoke with Engadget about the layoffs, claiming at least five employees from the team had been fired as part of the sweep. They also expressed that tension had been growing at the company even before the firings, as Xbox had been moving more toward contracted studios for work on Halo since 2023. Before then, Xbox was reportedly relying heavily on individually contracted developers. The mix of full-time devs and contracted labor is how series like Call of Duty typically operate, and notably, CoD developers Raven Software and Sledgehammer Games were hit with layoffs, too, according to one report.

Halo Studios Reportedly Lays Off At Least 5 Employees

It’s unclear if the shift to contracted studios was the core driver of tension in the team, but the anonymous developer suggests morale was generally low leading up to the layoffs. They said they “don’t think anybody is really happy” with the level of quality at the moment. That may refer to Halo Infinite‘s ongoing support or the upcoming Halo announcement Xbox teased for this October, which many speculate will either be Halo 7 or a Halo: Combat Evolved remake. Whatever the case, though, it seems the series’ developers have not been entirely enthusiastic about their workplace lately.

The developer also mentioned Microsoft’s increasing use of AI. CEO Satya Nadella had previously said that Xbox could generate entire games with AI in the future, and Microsoft-owned titles like Call of Duty: Black Ops 6 do contain AI-generated assets. How big a role this shift has played in the current layoffs and how it will affect the company in the future is uncertain for now. What is clear, though, is that it’s a volatile time in the industry right now.