Microsoft Game Studios is restructuring Rare, the Viva Pinata and Banjo Kazooie studio it acquired from Nintendo back in 2002. Rare studio manager Mark Betteridge told GamesIndustry.biz that a “small number of current positions” could be lost as a result; the studio will focus mostly on developing original IP for the Xbox 360 and adding content like avatars to the New Xbox Experience (NXE).

The shift comes amid the round of mass layoffs Microsoft (NSDQ: MSFT) announced in late January, with restructuring that has impacted the company’s game operations in particular: it shuttered ACES, the studio behind its long-running Flight Simulator franchise, fired about 30 percent of its game testers and also dismissed Chris Early, head of its Games for Windows Live division.

• Microsoft Keeps Trying With Zune; Restructures Hardware, Software Teams
• Layoffs Slice Into Microsoft’s Gaming Operations
• Industry Moves: Microsoft Reshuffles Interactive Entertainment With Marketing VP Bell’s Exit