Microsoft's organizational restructuring has reportedly impacted the team responsible for the iconic Halo franchise, as the tech giant increasingly relies on contracted studios for game development. This move comes amidst widespread layoffs across the gaming sector, demonstrating that even industry leaders aren't exempt from current economic pressures.

Recent reports indicate Microsoft eliminated approximately 9,000 positions globally in July 2025, representing about 4% of its total workforce. Within the gaming division specifically, estimates suggest up to 2,000 employees may have been affected. Several Xbox-owned studios have confirmed staff reductions, with Halo Studios (previously known as 343 Industries) now joining the growing list of impacted teams.

An anonymous developer from Halo Studios revealed to Engadget that at least five team members were dismissed in the recent cuts. The source indicated tensions had been mounting prior to the layoffs, as Microsoft began transitioning more Halo development work to external studios starting in 2023. This hybrid approach combining in-house and contracted developers mirrors practices seen at other major franchises like Call of Duty, which has also experienced recent workforce reductions.

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While the exact reasons behind the team's dissatisfaction remain unclear, the developer suggested quality concerns may be a factor, potentially relating to Halo Infinite's ongoing support or the anticipated October announcement speculated to be either Halo 7 or a Combat Evolved remake. The anonymous source stated morale was low before the layoffs, with few team members satisfied with current quality standards.