Xbox is preparing to shut down or sell three of its studios: Ninja Theory, Double Fine, and Compulsion Games, according to reports from The Verge and Bloomberg. Employees at Ninja Theory were informed on Monday that the studio would be closing, but leaders are negotiating a buyout to keep the studio operational. Ninja Theory is known for the Hellblade series, with a new entry scheduled for 2027.
Double Fine, founded in 2000 by Tim Schafer and others, is known for the Psychonauts games. Studio leaders are currently in negotiations to buy back the company from Xbox to avoid closure, as reported by Bloomberg. Compulsion Games is also in talks to secure its future, known for games like Contrast and We Happy Few, with a new title, South of Midnight, set to release in April 2025.
Other studios under the Xbox Game Studios banner are similarly negotiating for their futures amid reports of potential shutdowns. This umbrella encompasses numerous studios including Arkane, Bethesda, Halo Studios, id Software, Obsidian, Playground Games, ZeniMax, and Activision Blizzard King. Xbox has been contacted for clarification regarding the reported closures and buyout discussions.
Microsoft’s acquisition of game studios began in 2018 with purchases including Ninja Theory and Compulsion Games. Between 2020 and 2021, Xbox acquired eight additional studios through ZeniMax Media. In 2022, Xbox announced plans to acquire Activision Blizzard for $69 billion, a deal completed at the end of 2023 after scrutiny from regulators.
Since these acquisitions, Microsoft has executed several rounds of layoffs, impacting thousands within its gaming division and led to the closure of several studios, including The Initiative. This year, Phil Spencer, the longtime head of Xbox, stepped down, with Asha Sharma assuming the CEO role. Additionally, Craig Duncan, head of Xbox Game Studios since October 2024, departed on Monday, coinciding with growing employee concerns about more layoffs expected in 2026, following a troubling memo from Sharma in mid-June.
