Last week saw brutal layoffs at the Windows and Xbox publisher Microsoft, with the company letting over 9,000 people go. Its Xbox division was impacted significantly by the cuts, with Rare's Everwild game cancelled, Perfect Dark scrapped as well, and its developer The Initiative shuttered. Since then, it's come out that multiple other studios were affected as well — and according to a new report, Halo Studios (formerly 343 Industries) was one of them.
The news comes from an Engadget report in which it's said a Halo Studios developer spoke with the outlet, stating that "at least five employees" were let go from the Halo team as part of Microsoft's cuts. Notably, the studio was previously "hit hard" by a similarly large wave of Microsoft layoffs in 2023.
Following a division-wide Xbox email from Microsoft Gaming CEO Phil Spencer about imminent "organizational shifts" to "increase agility and effectiveness" last week, affected Halo Studios employees were brought into a meeting with leaders and informed of the layoffs.
"I'm personally super pissed that Phil's email to us bragged about how this was the most profitable year ever for Xbox in the same breath as pulling the lever [on the layoffs]," the developer said. "I wasn't sure what part of that I was supposed to be proud about."
The developer also reportedly said that things are tense at the studio right now, and that they've been so even before last week's layoffs. With Halo Infinite support winding down, it's been said the developer is working on multiple projects in Unreal Engine 5; one of these — implied to be the next Halo game we might see later this year that could be out in time for Xbox's 25th Anniversary — has apparently gone through significant development struggles.
"I don't think anybody is really happy about the quality of the product right now," the developer told Engadget. "There's been a lot of tension and pep talks trying to rally folks to ship."
They then went on to discuss a shift from a reliance on working with individuals contracted temporarily — something former Halo Studios devs have criticized strongly in the past — to instead contracting entire studios for development support. In the employee's view, however, this direction hasn't borne much fruit.
"Xbox in general feels years behind the curve in game development, and it leads to a lot of wasted time and effort," they said, before adding: "They're trying their damndest to replace as many jobs as they can with AI agents." Recently, it was suggested Microsoft plans to replace laid off salespeople with "solutions engineers" to bolster AI sales, and Microsoft's President of Developer Division and GitHub Julia Liuson said "using AI was no longer optional" as well.
Halo needs a win — will it get one?
- DEAL: Xbox Game Pass Ultimate 1-month memberships are $13.69 at CDKeys, giving you access to Microsoft's service for a cool discount
When 343 Industries' Halo Studios rebrand and the move to Unreal Engine 5 was first announced, I wrote about how the move sparked the first optimism I'd felt for Halo in ages. At the time, I believed shifting to a more widely used and understood engine would help speed up and improve the efficiency of development, hopefully ensuring we wouldn't get future releases like Halo 5: Guardians and Halo Infinite that felt unfinished for months or years.
Assuming everything from this report is true, though, it sounds like there are still major issues complicating the path forward for Xbox's flagship franchise, and that has me very worried for both the people at Halo Studios and the quality of its next game.
Halo has struggled to rise to the former heights of its popularity for well over a decade now, and in my view, it's a result of new games launching with a bare-bones amount of content followed by slow and underwhelming updates. Sure, they eventually start including meaty additions and coming at a steady cadence, but by then, most players have long since moved on.
With Halo's relevance continuing to wither away because of this, what the series really needs right now is a clear win — a new game that, whatever it is, feels complete and whole at launch. But after reading this developer's comments, I'm not exactly confident that it's going to get one.
