Microsoft’s post-layoffs Halo studio is smaller and switching to Unreal Engine

Halo developer 343 Industries lost at least 95 people due to Microsoft’s recent layoffs, and the studio is apparently switching from its proprietary Slipspace engine to Epic Games’ widely used Unreal Engine for future games, Bloomberg reports.

The future of Halo has been somewhat up in the air since the layoffs announced on January 18th. Halo Infinite had a strong launch in late 2021, but over time, fans started to get annoyed by frustrations with multiplayer progression, repeated delays to planned features like network campaign co-op and Forge (which finally launched in November), and no indication that new campaign content was imminent.

343 has publicly affirmed its commitment to the franchise following the layoffs. “Halo and Master Chief are here to stay,” studio head Pierre Hintze, who took over the role in September, said in a statement tweeted from the Halo account on January 21st. “343 Industries will continue to develop Halo now and in the future, including epic stories, multiplayer, and more of what makes Halo great.” And Matt Booty, who heads up Xbox Game Studios, told Bloomberg in an interview that “343 will continue as the internal developer for Halo and as the home of Halo.” 

But it’s unclear when we might see the next game in the series, so it’s difficult to know exactly what 343’s involvement will be with the franchise going forward. For example, the studio was already working with Austin-based Certain Affinity on a battle royale game codenamed Tatanka, but that game “may evolve in different directions,” Bloomberg reports.

Tatanka will also apparently be developed on Unreal Engine, while future Halo games “will also explore using” Unreal, Bloomberg says. If true, the change marks yet another major game developer moving to Unreal; Witcher and Cyberpunk developer CD Projekt Red announced a “multi-year strategic partnership” with Epic Games to use Unreal in March, and in November, Epic said that more than half of all announced next-gen games are made on Unreal Engine.

343 also apparently hasn’t been making new story content for Halo Infinite, which seems surprising for a game once billed as the “start of the next ten years for Halo” and titled, well, Infinite. Instead, developers were “making prototypes in the Unreal Engine and pitching ideas for new Halo games,” Bloomberg says. I was personally disappointed to read that, as I really enjoyed Infinite’s campaign and had been hoping for more.

We’ve asked Microsoft for comment on Bloomberg’s report. Epic declined to comment.