The Microsoft Studio Behind Halo Franchise Is All But Starting From Scratch

Microsoft Corp. says it’s going to keep making new games in the popular Halo franchise at its prized 343 Industries studio — despite rumors to the contrary. But after a leadership overhaul, mass layoffs and a host of big changes, the outfit is all but starting from scratch.The Redmond, Washington-based 343 Industries released its latest game, Halo Infinite, in December 2021 to widespread critical acclaim. It was seen as a redemption story for a title that suffered multiple delays, endless development problems and a merry-go-round of creative leads. But in the months that followed, fans turned against the game, complaining about a thin road map and the slow rollout of features that had been expected on day one. At the same time, 343 was seemingly losing staff by the week and went through a major leadership change last fall that led some employees to brace for a reorganization.

The ax fell in mid-January when Microsoft announced mass layoffs and 343 Industries was hit hard. While Microsoft declined to provide specific figures, at least 95 people at the company have lost their jobs, according to a spreadsheet of affected employees reviewed by Bloomberg. The list named dozens of veterans including top directors and contractors, upon which the studio heavily relies. Those temporary employees were given just a few days’ warning before their contracts came to an end, according to people familiar with the process, asking not to be identified because they weren’t authorized to speak publicly.

The cuts led to rumors that 343 would farm out development of the Halo series to other game companies. Matt Booty, head of Microsoft’s Xbox Game Studios, said in an interview that “343 will continue as the internal developer for Halo and as the home of Halo.” Internally, Booty has assured 343 staff that even as they work with outside partners and outsourcing houses, they will remain in charge. Questions remain, however, about the fate of the Halo franchise as the studio is hollowed out and makes big changes to how it develops games.

Chief among them is a pivot to a new gaming engine, the suite of tools and technology used to make video games. The studio’s own engine, known publicly as Slipspace, has been one of the biggest points of contention over the past two decades. Based largely on old code from the 1990s and early 2000s, it’s buggy and difficult to use and has been the source of headaches for some developers on Halo Infinite, people familiar with the development said. Several multiplayer modes that are nearly finished, such as Extraction and Assault, both popular in previous Halo games, have yet to be released in part because of issues involving the engine, they said.

At several points over the past decade, management at 343 debated switching to Epic Games Inc.’s popular Unreal Engine. But it wasn’t until late last year, when previous studio head Bonnie Ross and engine lead David Berger departed and Pierre Hintze took over, that the firm finally decided to pivot to Unreal. This switch will start with a new game code-named Tatanka, according to people familiar with the plans. That project, which 343 is developing alongside the Austin, Texas-based game studio Certain Affinity, started off as a battle royale but may evolve in different directions, the people said. Future games in the series will also explore using the Unreal Engine, which may make development easier, although internal skeptics are worried that the switch may have a negative impact on the way Halo games feel to play. A Microsoft spokesman declined to comment on issues with the engine or on the company’s plans to pivot to Unreal.

Since Halo Infinite was released, fans had assumed that in addition to new multiplayer modes, 343 was working on new content for the story. But that wasn’t the case, according to the people familiar with the situation. Developers were making prototypes in the Unreal Engine and pitching ideas for new Halo games rather than working on new missions for Halo Infinite. Many of those developers were laid off this month and the company isn’t actively working on new story content, the people said. A Microsoft spokesman declined to comment.In the eyes of some observers and former 343 employees, the reorganization was a long time coming. The studio, which was founded in 2007 to inherit Halo after Microsoft parted ways with original developer Bungie, has struggled through many challenges, including the release of several polarizing games. Patrick Wren, a former 343 designer, said on Twitter that the job cuts and the state of the Halo franchise overall are the result of “incompetent leadership up top” during Halo Infinite’s development that led to “massive stress on those working hard to make Halo the best it can be.”

Microsoft once promised that Halo Infinite would be “the start of the next ten years for Halo,” but its recent moves point to a shorter-term vision. In an email to staff following the layoffs, Hintze wrote that the current plan for 343 is to support “a robust live offering” for Halo Infinite and its Forge level creator and “greenlighting our new tech stack” for future Halo games while also “bringing Halo to more players through more platforms than ever before.”