It’s been another difficult week for Xbox and the many studios it operates, as a second wave of layoffs has ripped through the company. The saddest news surrounds the impending closure of Hellblade studio Ninja Theory, but layoffs have all but dismantled Halo Studios and halved Age of Empires developer World’s Edge as well.
However, that’s not all that happened. Besides the layoffs, there’s been notable restructuring of the Xbox division, effectively re-delegating the management of studios away from Xbox directly, to either Bethesda or Activision – publishing operations Xbox owns. Obsidian moved to Bethesda, while Rare, World’s Edge and Halo moved to Activision.
Since the news, there’s been an outpouring of concern from the communities of each studio’s games, some wondering if Activision will operate these new businesses as it does Call of Duty, and more aggressively monetise their games, while others are questioning whether Obsidian will now have freedom to make anything that isn’t Bethesda-related.
Ninja Theory
Senua – Official Reveal Trailer | Xbox Games Showcase 2026
Ninja Theory still hasn’t said anything publicly related to the studio’s impending closure, nor have any of the key figures there. Understandably, the sentiment on the Hellblade subreddit is sad, with an announcement post labelling it “devastating”.
“The whiplash is what really frustrates me,” that post read. “Three months ago, they were on stage at the Xbox reveal for Senua. What’s the point of showcasing a brand-new game if you’re going to shut down the studio who made it?” Responses to this suggested Xbox did it to make Ninja Theory seem as appealing as possible to any possible buyers of the studio.
Other posts highlight how Ninja Theory was “one of the few arthouse developers in the triple-A space”, and that perhaps this signals Xbox’s move away from “ambitious, artistic and less mainstream titles” and towards “games with calculated sales potential”. However, some questioned how successful the Hellblade series actually was, and highlighted Ninja Theory’s foray into hero shooters with 2020’s ill-fated Bleeding Edge.
“It genuinely breaks my heart,” wrote another redditor, revealing a touching personal anecdote related to the studio. “I once reached out to Ninja Theory pre-Microsoft acquisition because I wanted to get a Hellblade tattoo, with runes inspired by music from the game, but wanted to make sure they were accurate. NT got back to me within days, said they didn’t have an expert on-staff who knew [the ancient alphabet] Elder Futhark but gave me the contact for the Oxford professor they consulted [with] for the game. She was so detailed in her answer and I got my tattoo with an awesome story. And Melina [Juergens, the actor who portrayed Senua] was the first person on [Instagram] to like my post showing it off!
“They’ve always been so human throughout the production and you could tell they took pride in their work … I can’t believe I’m referring to them in past tense like a lost loved one, but it doesn’t feel too far off. Yeah… this one hurts.”
Obsidian
Grounded 2 – Official PlayStation 5 ‘Into The Abyss’ Trailer | IGN Summer of Gaming 2026
Obsidian also hasn’t said anything publicly following the restructuring, though its new overlord Bethesda has promised Obsidian’s “creative identity and strengths” will be retained. The big question here is whether Obsidian has scope to work on anything that isn’t the new Fallout game announced by Xbox earlier this year.
“Even as a huge fan of Bethesda, I don’t see good coming from this,” wrote one observer on the Outer Worlds subreddit – a series that could be impacted by the move. But others were at least optimistic about the series’ immediate future, noting the Premium Edition for The Outer Worlds 2 came with a DLC pass for two add-ons, which haven’t arrived yet. “Do you really think that Obsidian would just cancel DLC that people paid for?” they said.
The other game Obsidian currently operates is Grounded 2, which is in early access and expanding this year with the Into the Abyss update. As many people highlighted on the game’s subreddit: “People underestimate how well Grounded does for Xbox and how huge of a franchise it actually is. It’s gonna stay safe.” Indeed, Xbox alluded to such in its memo this week, saying Obsidian “will continue with its current projects, including Grounded”.
That leaves Avowed and Pillars of Eternity – games based in the same world. Unfortunately, Obsidian has said previously that Avowed missed sales targets, which doesn’t bode well. And with Xbox developing Fable and a new Elder Scrolls game, it’s hard to see where a new Avowed fantasy RPG would fit in. “Does this mean Obsidian is just gonna be the Fallout Spin-off Team like id Software with Doom or…?” One Fallout subredditor asked, open-endedly.
Turn 10 and Playground Games
Fable – Official Release Date Trailer | Xbox Games Showcase 2026
The decision to merge Forza developers Playground Games and Turn 10 hasn’t caused much commotion, partly because, as many people on the Forza subreddits point out, Turn 10 doesn’t seem to exist in a meaningful capacity any more.
“If anything this means Turn 10 and Motorsport is done,” stateda member of the Forza Horizon subreddit. “The only thing Turn 10 is going to do (right now) is possibly help Horizon 6’s expansions (maps, car models, porting stuff from Motorsport that isn’t in the Horizon series yet) while Playground finishes up Fable.”
It’s a sad state of affairs for some. “The latest Motorsport was a disappointment,” lamented one redditor, “but as a long time Motorsport fan, this is incredibly sad. I hope they at least port the tracks from Motorsport over to Horizon. I’m going to miss trying to shave tenths of a second off of lap times.”
World’s Edge
As far as Age of Empires 2: Definitive Edition support is concerned, some in the community fear it’s the end after developer World’s End suffered substantial layoffs this week. “RIP AOE2 1999-2026,” one subredditor succinctly put it. “Well, it was fun while it lasted,” said another.
A third commenter said: “Never good news. There probably [aren’t] too many good outcomes of a major studio taking over a smaller one. At least not these days.”
Sea of Thieves – Official August 2026 Update Trailer
On the Sea of Thieves subreddit, people shared edited and animated GIFs from the film Titanic to insinuate a sinking ship, and sentiments such as: “I’m teetering between ‘Oh God not CoD’ and ‘Could they really do worse?'” And it’s this latter point about Sea of Thieves’ currently unfavourable state that seems to dominate.
“I dunno. On the one hand, it’s Activision, not exactly the harbingers of quality. On the other, could they do worse than Rare has been?” asked one commenter. “You have no idea,” answered someone else. “Wait until you get Diablo and Call of Duty themed skins. That’s when you know it’s over. But the funny part is that some of the playerbase will cheer for that and will buy it.”
“We already had Gears, Halo and Rare games skin in SoT,” another person pointed out.
Rare hasn’t said anything publicly in response to the Xbox restructuring yet, but there don’t appear to be any layoffs – or layoffs in noticeable quantities – connected to the company. This suggests it’s working on something Microsoft values, the question being: what, exactly? Rare’s fantastical forest multiplayer game Everwild was cancelled a year ago, and recent leaks have suggested we might be looking at an impending Sea of Thieves spin-off or sequel.
A heavy week, then, and again, our thoughts are with everyone affected by the Xbox layoffs.
