This move is part of a broader "reset" initiated by CEO Asha Sharma that includes closing or spinning off several developers to streamline operations.
These changes signal a significant transition for Xbox as it moves away from its traditional identity as a console-exclusive business toward a broader software and services model.
By consolidating developers like Rare and World’s Edge under Activision and moving Obsidian under Bethesda, Microsoft is prioritizing its most lucrative intellectual property to pursue a goal of reaching one billion daily users.
This strategy involves scaling back on smaller titles to focus resources on established hits like *Fallout* and *Minecraft* while reevaluating the long-term investment in its Game Pass subscription service.
Under the new structure, the traditional Xbox Game Studios umbrella has been significantly reduced, with several developers such as Double Fine and Compulsion becoming independent.
While Microsoft still intends to produce hardware through a future family of devices currently known as "Project Helix," its publishing power is now primarily centered on its multibillion-dollar acquisitions of Bethesda and Activision Blizzard.
The reorganization leaves the remaining internal teams focused on specific high-value franchises to sustain the company's competitive position in the cloud and mobile gaming markets.