Report: Halo Studios and Obsidian Won't Be Shut Down During Xbox Reset

If you’ve been keeping tabs on gaming industry news lately, you probably know Xbox has been going through one of its most turbulent periods in years. Reports surrounding ongoing Xbox reset have suggested multiple first-party studios are facing layoffs, restructuring, or even closure. Amid all that uncertainty, however, two well-known Xbox first-party developers may have avoided the worst-case scenario.

Fresh reports indicate that Halo Studios and Obsidian Entertainment are not currently involved in discussions surrounding a potential shutdown. While Microsoft has yet to publicly comment on the ongoing restructuring, multiple industry insiders now suggest both studios remain important parts of Xbox’s long-term plans despite the broader uncertainty surrounding Xbox Game Studios.

According to Windows Central’s Jez Corden, Halo Studios is “not in negotiations to shut down,” although the studio will reportedly face close evaluation over its stewardship of the Halo franchise. Corden also claims that part of Microsoft’s restructuring could involve redirecting additional resources toward strengthening Halo, one of Xbox’s most valuable gaming properties.

Meanwhile, Bloomberg’s Jason Schreier says Obsidian Entertainment is also safe. Posting on Bluesky, Schreier stated that Xbox is keeping the studio, contradicting an earlier report that suggested Obsidian had entered negotiations to avoid closure. The original claim was later acknowledged as a mistake by The Game Business.

That being said, the reports don’t necessarily mean either studio will emerge untouched. Microsoft’s wider restructuring efforts are still unfolding, and layoffs could still affect individual teams even if the studios themselves remain operational.

As of now, Microsoft hasn’t officially confirmed which studios will ultimately be affected. Until the company provides an official update but considering the sources of claims it seems two big studios are at least safe for now.