Activision to Develop Next Halo Game Amid XBOX Reshuffle

After years of turmoil, Microsoft hands the next Halo game to Activision, closing a strange chapter in gaming.

If someone told you back in 2008 that the next Halo game would eventually come from the studio behind Call of Duty, you would have laughed them out of the room. Back then, Halo and Call of Duty were rivals fighting for the same living rooms, friend groups, and bragging rights.

Now that rivalry has folded in on itself, because Microsoft just confirmed that Activision is building the next Halo game. This news came straight from Microsoft's own XBOX announcement page, buried inside a broader update about restructuring across its gaming division.

The key line said Activision will expand its role to include World's Edge and Rare, and will also develop the next Halo game through a newly formed team that operates separately from ongoing Call of Duty development. A smaller group will remain at Halo Studios to keep existing games running and support the community.

Still, the studio formerly known as 343 Industries is clearly being scaled back significantly. Alongside this shift, Microsoft confirmed it cut roughly 268 roles across Halo Studios, other first-party teams, and XBOX Game Studios management. Put together, it paints a picture of Halo Studios being hollowed out rather than shut down outright.

Enough staff remains to patch existing titles and keep online services alive, but the franchise's creative future now sits with Activision. To understand why this decision landed the way it did, you have to look back at where Halo actually came from. In the mid-2000s, Halo was at its cultural peak.

Halo's rivalry with Call of Duty traces back to its trilogy-era peak.

Halo 3 had turned the series into a phenomenon, but Call of Duty 4: Modern Warfare arrived around the same time and pushed shooters in a new direction. On XBOX specifically, players genuinely debated which franchise was better, something that feels almost unthinkable now that Activision is the one shaping the next Halo game.

Many longtime fans still view that original trilogy as the series' high point, with Halo 3 often singled out as the moment everything came together. Halo: Combat Evolved introduced the idea of a console shooter with a real community feel, even if that meant physically hauling CRT monitors to a friend's house for a LAN party.

Halo 2 changed that by bringing online multiplayer to consoles in a way that let players jump in and find matches instantly, without needing everyone in the same room. Halo 3 built on that momentum with Forge, letting players create and share custom maps, plus a hub that highlighted community clips and let you revisit your own matches.

For a while, the series felt like it could do no wrong. That began to shift once Bungie moved on and 343 Industries, now rebranded as Halo Studios, took over. Halo: Reach already stirred debate thanks to loadouts and more noticeable bloom mechanics, subtle changes that hinted at a different design philosophy.

343's small tweaks snowballed into a full identity crisis for Halo.

Halo 4 pushed that further, introducing sprint as a default mechanic instead of an optional loadout choice, and fans at the time openly compared it to Call of Duty. Sprint is far less controversial today simply because it became the industry standard, but back then it symbolized a franchise drifting from its roots.

Excitement briefly returned with Halo: The Master Chief Collection, a compilation that promised to bring the classic games together in one place. Unfortunately, launch day turned into a disaster. Matchmaking searched endlessly, teams were mismatched, and connections dropped mid-game. It set a troubling precedent for what fans would come to expect from Halo Studios.

Halo 5 leaned even harder into a Call of Duty-style identity, and for many longtime fans, it stopped feeling like a true Halo experience altogether. Some players enjoyed the multiplayer, but the shift in tone was hard to ignore, leaving many wondering whether the series had moved past what originally made it special.

Then came Halo Infinite, which many consider one of the lowest points in franchise history. The game missed its planned launch alongside the XBOX Series consoles because of quality concerns nicknamed "Craig," and expectations reset to simply hoping for a solid multiplayer mode at release.

Infinite's rocky launch pushed Microsoft toward handing Halo to Activision.

Instead, the game launched without Team Slayer, one of the most basic playlists in Halo history. That moment alone convinced many people that Halo Studios had lost touch with what the franchise actually needed. Leadership changes followed, reportedly turbulent ones, before Halo: Campaign Evolved eventually released.

According to people familiar with development, the team pushed hard to release the game despite ongoing management issues behind the scenes. Even with that release, it became increasingly clear that Halo could no longer stay solely in Halo Studios' hands.

Once that reality set in, the obvious question became who would take over. Microsoft had already scaled back Halo Studios significantly, and Activision stood out as the only realistic option left standing. It is a strange full-circle moment, since Microsoft technically owns Activision now, meaning the Halo company purchased the Call of Duty company. That same Call of Duty company is now shaping the next Halo game.

Reports describe the upcoming project as a full, mainline entry in the series rather than a spin-off or remaster. Speculation has already begun about exactly which internal team will lead development. Treyarch seems unlikely given its ongoing Call of Duty commitments, while Sledgehammer Games has been mentioned as a strong possibility.

Sledgehammer's steady track record makes it the front-runner to lead development.

Sledgehammer has historically supported Call of Duty through titles like Advanced Warfare, Vanguard, and parts of Modern Warfare III, without ever being the primary studio behind a mainline entry. That track record makes them a logical fit to lead the next Halo game with consistent output.

Part of the reasoning behind this decision comes down to reliability. Halo Studios reportedly struggled internally for years, relying heavily on contractors who cycled in and out on short-term arrangements. Combined with the complexity of the custom Slipspace Engine, onboarding new developers consistently became a major obstacle.

Traces of that struggle showed up directly in Halo Infinite's campaign, which felt disjointed, almost like two separate projects stitched together. Activision, whatever people think of individual Call of Duty entries, has proven it can ship a new game every single year without fail.

That kind of consistent infrastructure is exactly what many hope translates into a smoother development cycle for the next Halo game, even if it takes years to materialize. One major unknown moving forward is direction. Halo Studios spent roughly fifteen years building out lore, leaving Activision boxed into an established narrative if they choose to continue the story as-is.

Whether to continue the existing story or reboot it remains a genuine open question.

A soft reboot is also possible, potentially resetting things as far back as after Halo 3, though that remains pure speculation at this stage. Either path carries real risk, since jumping straight back into unresolved Halo Infinite storylines feels complicated, while erasing over a decade of lore comes with its own backlash.

Given how early this all is, realistic expectations point toward a lengthy wait. If development is just beginning, a release around 2031 feels plausible, and even that estimate leans optimistic given Activision's additional resources.

What's clear is that Halo, as fans have known it for two decades, is entering an entirely new era. After years of comparisons, controversy, and disappointment under Halo Studios, the next Halo game will now carry the Call of Duty studio's fingerprints, whether longtime fans are ready for that shift or not.