Xbox to Shut Down Compulsion, Double Fine, Ninja Theory

Multiple Xbox studios are reportedly in talks to spin off and become independent entities, a move aimed at averting potential shutdowns, Bloomberg first disclosed.

Bloomberg’s report, corroborated by insiders at VGC, names Compulsion Games, Double Fine, and Ninja Theory among the studios actively negotiating a separation from Microsoft.

These studios face the looming threat of closure, yet they have the chance to purchase themselves from Microsoft and operate autonomously. However, employees are likely to lose their positions in the process, according to Bloomberg journalist Jason Schreier.

Schreier noted that staff at several studios have been informed of the situation and are permitted to seek new employment, while the ultimate fate of the studios remains uncertain.

Cambridge‑based Ninja Theory, the creators of Hellblade, unveiled a fresh title—Senua—at last week’s Xbox Games Showcase, adding another ambitious project to its already impressive portfolio.

These developments arrive amid looming restructuring within Microsoft’s gaming arm, a move that follows recent remarks from CEO Satya Nadella and Xbox chief Asha Sharma, who emphasized the need for greater profitability in the division.

Sharma’s comments at a Bloomberg Tech conference last week, where she hinted at a “reset” of the business due to its “unhealthy” state, sparked speculation about another wave of layoffs.

Bloomberg subsequently reported that Microsoft plans substantial cuts in its gaming sector, slated to take effect shortly after the fiscal year’s close on June 30.

During the same period, Sharma released an unexpectedly forthright memo to her team, outlining the “realities we must navigate.” She highlighted that Xbox’s annual revenue had slipped by almost half a billion dollars over five years, while hardware expenses had surged fourfold, and the studio network was described as “overextended.”

The announcement follows a week after Xbox’s highly anticipated Games Showcase, where the company unveiled progress on its flagship titles and pledged new console exclusives. The virtual event was subsequently complemented by an extravagant Fan Fest and media gathering in Los Angeles.

These impending cuts arrive exactly one year after Microsoft’s massive 9,000‑job reduction last summer, which dealt a severe blow to the Xbox division. The layoffs also led to the cancellation of high‑profile projects such as the Perfect Dark reboot and Rare’s Everwild, among others.

In 2024 and 2023, Microsoft executed further reductions within its Xbox unit, cutting 1,900 positions across Activision Blizzard, Bethesda, and Xbox itself.

Earlier on Monday, Craig Duncan, the head of Xbox Game Studios, revealed that he will be stepping down from his position after just 18 months in the role. With his departure, the studios will now report directly to Xbox’s Chief Content Officer, Matt Booty, until a new leader is appointed.