Xbox Studios Face Shutdown or Buyout

Xbox is reportedly making significant changes, with plans to shut down or sell at least three of its studios: Double Fine, Ninja Theory, and Compulsion Games. Ninja Theory, known for the Hellblade series, has informed employees of its potential closure, though the team is attempting to find a buyer to ensure continued operation. Similarly, leaders at Double Fine, the studio behind the Psychonauts series, are in active negotiations to buy back their studio from Xbox rather than face dissolution. Compulsion Games, based in Montreal and known for titles like We Happy Few and South of Midnight, is in a comparable situation.

This restructuring follows a period of aggressive acquisition by Microsoft, which began in 2018 and included major purchases like ZeniMax Media and Activision Blizzard King. Despite these investments, Microsoft's gaming division has seen multiple rounds of layoffs and studio closures, including The Initiative. These developments occur as Xbox Game Studios head Craig Duncan departed the company on the same day these reports emerged, and following an internal memo from new CEO Asha Sharma hinting at further layoffs expected in 2026.