Xbox is undergoing a substantial restructuring, which includes significant layoffs and the spin-off of several game development studios. In a memo to staff, Xbox CEO Asha Sharma announced that approximately 3,200 employees will be laid off, with 1,600 cuts occurring immediately and the remainder scheduled for later.
As part of this organizational shift, Compulsion Games, the studio behind the upcoming "South of Midnight," and Double Fine Productions, known for "Psychonauts 2," will transition back to independent operations. Both studios will retain full rights to their intellectual property and will receive financial support from Microsoft to develop new games and seek future publishing partners. Compulsion Games expressed gratitude for their time with Xbox and enthusiasm for their future as an independent entity, emphasizing their commitment to creating unique and impactful games.
Furthermore, Ninja Theory and Undead Labs have entered into new ownership agreements. These studios will continue to receive funding from Microsoft to complete and expand their current projects, "Senua" and "State of Decay 3," respectively. The identities of the new owners for these studios have not yet been disclosed.
In France, Arkane Lyon, the developer working on the "Blade" game, is undergoing a mandatory consultation process with its Works Council to explore "potential strategic options" for its future, a process influenced by local legal requirements.
These changes, which are described as the most significant restructure in Xbox history, are expected to result in the departure of over 300 jobs from the Microsoft Gaming division. Reports indicate that Hideo Kojima's upcoming Xbox horror title, "OD," will not be affected by these developments.