Microsoft is reportedly considering the closure or spinoff of several studios, including Double Fine, Ninja Theory, and Compulsion Games, as part of an effort to "reset" its gaming division. This move follows a period of significant layoffs, game cancellations, and studio closures within Xbox over the past few years. Anonymous staff from multiple studios have shared this information, according to a report from Bloomberg. The Verge also reports that Ninja Theory, fresh off the announcement of a new Senua game, has been informed of a potential Monday closure and is seeking a buyer.
The three studios mentioned are noted for developing critically acclaimed, creative titles that may not meet the high sales expectations of Microsoft's gaming division. One analyst described them as "brilliant for prestige and rotten for the spreadsheet." Double Fine is known for unique games like "Psychonauts" and "Stacking," while Ninja Theory developed the "Hellblade" series, and Compulsion Games created "We Happy Few" and the upcoming "South of Midnight."
While Microsoft has not yet commented on these reports, the alleged actions align with recent internal communications from Xbox leadership. An internal memo from Xbox CEO Asha Sharma and Xbox Game Studios head Matt Booty indicated concerns over falling revenues despite substantial investments and rising hardware costs, partly attributed to generative AI. The memo highlighted an "accountability margin" of 3% for Xbox, a figure reportedly lower than other Microsoft divisions.
The reported studio actions also come shortly after Xbox Games Studios boss Craig Duncan and chief of staff Louise O'Connor announced their departures. This follows a recent public relations push by Microsoft, which included showcasing upcoming exclusive titles at events like Summer Game Fest, in an apparent effort to shift focus from the division's ongoing challenges.