– Microsoft is planning to shut down or sell Ninja Theory, Double Fine, and Compulsion Games.
– The studios are actively seeking buyers or negotiating spin-offs to avoid total closure.
– The cuts are part of a 100-day reset under new Xbox CEO Asha Sharma.
– Xbox is shifting focus away from smaller prestige games to major franchises like Halo, Gears, and Fallout.
– Major leadership changes include the resignation of Xbox Game Studios head Craig Duncan.
Microsofts Gaming Shakeup
Microsoft is reportedly preparing to close down or sell off at least three of its most recognizable game development studios. According to The Verge and Bloomberg, Ninja Theory, Double Fine, and Compulsion Games will reportedly be shut down soon as the company embarks on a massive restructuring of its gaming division.
New Leadership Brings Big Changes
The deep cuts are part of a broader reset for Xbox under newly appointed CEO Asha Sharma, who took over from Phil Spencer earlier this year. The resulting internal shakeup has left the future of several fan favorite developers up in the air.
Ninja Theorys Fate in the Balance
Ninja Theory, the UK based studio famous for the Hellblade series, was reportedly told on Monday that it is shutting down. The team is now looking for a buyer to keep the doors open. This is especially surprising since the studio just teased a new Senua game aimed for 2027 during the Xbox Summer Game Fest showcase only a week ago.
Studios Fighting for Survival
Double Fine is not giving up easily either. Founded by Tim Schafer in 2000, the team behind Psychonauts and Broken Age is trying to buy itself back from Microsoft to return to independent development. Compulsion Games, the Montreal based studio that made We Happy Few and the recent South of Midnight, is aggressively negotiating a similar spin off to avoid being shut down completely.
More Studios at Risk
According to Bloomberg, these three studios are not alone. Several other teams within the Xbox Game Studios network are quietly trying to secure their futures and remain at high risk.
Why Microsoft is Cutting Deep
These closures stem from a tough 100 day reset initiated by Sharma. In a mid June memo to staff, Sharma and Xbox content chief Matt Booty admitted the studio system had grown too large to manage effectively. Microsoft has spent more than $20 billion on the Xbox division in the past five years, excluding the colossal $69 billion acquisition of Activision Blizzard King, but the yearly revenues have declined by about $500 million.
Focusing on Bigger Profits
To fix this, Xbox is stepping away from smaller prestige games to focus heavily on proven, highly profitable franchises like Halo, Gears of War, and Fallout. The studio cuts are also triggering major leadership changes. Craig Duncan, who became head of Xbox Game Studios in October 2024 after leading Rare, resigned on Monday along with his chief of staff, Louise O’Connor.
The End of an Buying Era
Microsoft started this huge buying spree back in 2018 when it acquired Ninja Theory and Compulsion Games, eventually adding Double Fine and leading up to the giant ZeniMax and Activision deals. Now, following consecutive years of heavy layoffs, Microsoft seems to be tearing down the massive studio empire it spent billions to assemble. With the company’s financial year ending in July, staff across the remaining Xbox studios are left waiting to see what happens next.