Rumor: Halo Game Development Is Shifting Towards Contractual Studios

A stunning little revelation has been made in light of the massive set of layoffs that’s just happened in Microsoft.

Engadget spoke to a number of former Halo Studios employees about what’s been going on behind the scenes. One developer laid out the full story for Halo Studios that may also be the situation with other studios and games under Microsoft.

This dates back to an earlier set of layoffs from when Halo Studios was still called 343 Industries. Since it happened in January 2023, one could argue that it is part of the ongoing wave of layoffs going on for three years now. Since that time, Halo has been worked on by a combination of full time employees and contractors. Junior producers and QA in particular are contractual.

This situation came to light last September 2024, when several Halo developers revealed that they would be unceremoniously dropped after working the 18 month contract, instead of being hired to go on full time. In essence, this created a system where Microsoft was training developers, who could have become specialists at Halo, only to let them go and be hired by other studios. The seeming upside of this arrangement is that it saves Microsoft money, but it may also be the reason why Halo as a franchise has been rudderless for at least the past year.

Engadget’s source now claims that Microsoft has shifted Halo development, so that instead of individual employees being contracted, they are now tying down entire external studios to temporary contracts. They are not the main developers, but this arrangement should allow Halo Studios to make their games faster, as they can scale up and down as necessary without Microsoft having to maintain a larger studio.

This kind of outsourcing arrangement is not particularly unusual in the industry, but when Microsoft made this decision, they also decided that Halo Studios needed to become smaller. This was the logic behind the layoffs in them, and it’s possible that Microsoft was thinking this of other games and projects as well. Engadget reports a similar arrangement already exists for Call of Duty development as well.

This employee ended their message to Engadget with this:

Xbox in general feels years behind the curve in game development, and it leads to a lot of wasted time and effort.

Engadget did also find departing employees who said they enjoyed their time at Halo Studios, which certainly sounds like a complete departure from the situation when they had those mass layoffs in 2023, and even before that. We wish the best for the departing members of Halo Studios, and we also hope the current team finds their way to bring Halo back to its heights.