Multiple Microsoft-owned Xbox game studios are reportedly in danger of being shut down.
According to Bloomberg, South of Midnight developer Compulsion Games, Psychonauts and Keeper developer Double Fine , and Hellblade developer Ninja Theory have each started negotiations with Microsoft to buy back their independence from Xbox Studios, in a bid to avert full studio closures. Reports of Compulsion’s potential closure were also corroborated by Kotaku.
Other threatened Xbox studios were not named in Bloomberg’s report, but apparently “several” others are also at risk of being closed. While nothing has been confirmed, Insider Gaming’s Mike Straw claims staff at Blade studio Arkane are “scared”.
In a separate report by The Verge, sources claimed that staff at Ninja Theory were informed of the impending closure on Monday, though the team is hopeful the studio will find a buyer. Ninja Theory only announced its next game – Senua – at the Xbox Games Showcase earlier this month. Senua is due out at some point next year, on PlayStation 5, Steam, Xbox Series S/X, and Game Pass.
Writing on Bluesky, Bloomberg’s Jason Schrier said: “Safe to say that the Xbox of July will look drastically different than the Xbox of June.”
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— Double Fine (@DoubleFine) June 16, 2026
Today’s news follows reports from last week that newly-appointed Xbox CEO Asha Sharma was planning a business “reset” for the brand, which would include slashing budgets and a “significant” number of staff layoffs. Meanwhile, just yesterday it was announced that Craig Duncan had stepped down from his role as head of Xbox Game Studios after less than two years.
Other changes at Xbox since Sharma took over at Xbox include the company refocusing on console exclusives, with both Gears of War: E-Day and Clockwork Revolution skipping PlayStation 5. Earlier this month, the company’s chief content officer Matt Booty said future console exclusives will be determined on a case-by-case basis, though Xbox’s big multiplayer and live service games will continue to be multiplatform.
Eurogamer has asked Xbox for comment on today’s reported studio closures, and will update when we hear more.
