XBOX Crisis: Hellblade creators fight independence avoid shutdown

Microsoft is reportedly weighing the closure of several high‑profile studios—Ninja Theory, Double Fine, and Compulsion Games—while simultaneously engaging in talks to help them regain independence from the Xbox ecosystem, Bloomberg reports.

The tech giant has outlined a wave of layoffs across its internal studios, though the exact scale remains unclear. Executives, including CEO Satya Nadella, have emphasized that decisive action is necessary to transform Xbox into a sustainable profit center.

During the recent Xbox Games Showcase, Ninja Theory unveiled a new project titled Senua, poised to elevate the narrative depth of its acclaimed Hellblade series. Meanwhile, Double Fine debuted Kiln this year, and Compulsion Games successfully ported South of Midnight to PS5 and Nintendo Switch 2 in March.

Renowned journalist Jason Schreier notes that several Xbox Game Studios teams—recently left leaderless—are racing against time to spin off and avoid shutdowns, even as some workforce reductions appear inevitable.

Xbox’s portfolio of studios—most notably Compulsion, Ninja Theory, and Double Fine—has entered a critical negotiation phase with Microsoft’s gaming division. The studios are actively seeking terms that could keep them afloat, with the possibility of spinning off into independent entities if a satisfactory agreement cannot be reached.

Industry insiders report that employees across the affected studios have been notified of the precarious situation and granted the freedom to pursue new opportunities. However, management has emphasized that the long-term viability of these studios remains uncertain.

Historically, the three studios in question have delivered critically acclaimed titles, yet many of their releases failed to achieve commercial success. Even projects that did perform well are now under scrutiny, as Xbox’s new leadership, spearheaded by Asha Sharma, is tightening its investment strategy to a select handful of high-profile franchises such as Halo, The Elder Scrolls, and Fallout.

According to Schreier on Bluesky, these are not the only three Xbox studios facing potential shutdowns, yet uncertainty still looms over the company’s future plans.

He added that further details will emerge in the coming days and weeks, and that the July Xbox launch is poised to be dramatically different from the June release.