In what is easily the biggest piece of news to emerge from today’s huge Xbox restructuring, Activision is officially developing the next Halo game while Halo Studios is being reduced to a small support team.

Microsoft confirmed the change in a statement published by Xbox chief content officer Matt Booty, revealing that Activision is assembling a new team specifically to handle the future of Xbox’s flagship franchise.

“Activision will also be developing the next Halo title, led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty.”

In other words, this does not appear to be an existing Call of Duty developer simply being told to make Halo between annual releases. Activision is creating a separate team for the project, although Microsoft hasn’t revealed who will lead it, which studios its developers will be drawn from or what form the new Halo game will take.

As for Halo Studios, formerly known as 343 Industries, Microsoft says only a small team will remain to support the Halo community and games already on the market. According to Tom Warren of The Verge, that includes Halo Infinite and Halo: Campaign Evolved.

This comes alongside another 268 job losses spread across Halo Studios, other first-party Xbox developers and Microsoft’s gaming management teams. Microsoft hasn’t revealed exactly how many of those positions are being eliminated from Halo Studios, but describing what remains as a “small team” suggests the developer has been gutted.

The news is especially remarkable because 343 Industries was renamed Halo Studios less than two years ago, with Microsoft presenting it as a fresh start for the developer. The team abandoned the Slipspace Engine in favour of Unreal Engine 5 and said it was working on multiple Halo projects, beginning with Halo: Campaign Evolved.

Apparently, that fresh start hasn’t lasted very long.

Earlier today, before Microsoft announced the changes, I predicted that Halo Studios would survive but be reduced to a support studio, helping other teams handle the next generation of Halo. That isn’t exactly what has happened—Microsoft only says the remaining team will support the community and current games—but it was close enough that I’m taking the win. Or loss, I guess.

I would also be surprised if Halo Studios survives in its diminished form indefinitely. Once Campaign Evolved has launched and support for Halo Infinite winds down, Microsoft may decide there is little reason to maintain an entire studio for what amounts to community and maintenance work. That is purely my own speculation, though.

Handing Halo to Activision is a monumental change. Bungie created the series, 343 Industries controlled it for more than a decade and now the future of Xbox’s most recognisable franchise belongs to a completely new team operating under Activision. That’s a crazy timeline for what was once an icon of gaming.

Whether that team can produce “the greatest Halo game ever,” as Activision president Rob Kostich says it intends to do, is another matter entirely.

As for the public reception to changes, it’s likely to be mixed. Halo Studios has been a divisive and certainly controversial studio since its inception, as fans have not been happy with its output or the quality of its games. I imagine many people will actually be happy to see Halo being given to someone else, viewing it as a chance for the franchise to return to glory, even if it comes at the cost of jobs lost.