Xbox is reportedly set to cut major, award-winning and beloved studios from its roster as part of cost-cutting measures, with some currently in negotiations to spin out of the company and become independent.
The news arrives courtesy of Bloomberg, which reports that studios including Double Fine Productions, Ninja Theory and Compulsion Games are among those at risk, despite all of them having glittering portfolios, as well as significant legacies within the global games industry.
Per Bloomberg, the studios ‘may still have the opportunity to buy themselves back from Xbox and go independent’ although as noted, this may still come at the cost of significant job losses, as studios will need to scale down without the financial backing of Xbox and its parent company, Microsoft.
Employees at several studios have reportedly been given permission to seek new work, indicating movements within Xbox have already begun, and that studios could be closed or spun off imminently.
Xbox studios in doubt – quick links
What to know about reported Xbox studio closures
This reported turmoil arrives in the footsteps of the latest Xbox Games Showcase, which was one of the headliners of the Summer Game Fest season. It appears this show was a finale of sorts, with subsequent changes likely to reshape Xbox in the months and years to come.
It feels particularly odd given that Ninja Theory actually appeared in the Xbox Games Showcase, announcing Senua, a new game in its long-running and highly award-winning Senua’s Saga franchise.
It’s likely for this reason that the studio reportedly remains in conversations with Xbox, and that it may yet have a future. But why was Senua announced as a flagship new release for 2027 if Ninja Theory was seemingly on the chopping block?
Double Fine Productions raises further questions. It’s one of the most tenured studios under the Xbox banner, having been in operation for 26 years, and part of Xbox for 7 years.
While this studio has had a quieter period recently, with seemingly muted releases for games including multiplayer brawler Kiln and the artful, atmospheric Keeper, it has a history of producing award-winning titles, including the popular Psychonauts series.
Throughout the years, it has also been a major prop for indie game companies, with its pre-Xbox publishing company Double Fine Presents elevating an array of novel, fun games on their path to release. It also hosts the Day of the Devs showcase, which aims to spotlight new and upcoming indie games across various public and digital events.
Should this company split off from Xbox, there is at least hope it can re-harness this energy, although a potential split is likely to shake its foundations.
Compulsion Games, Ninja Theory and Double Fine are award-winning studios
Compulsion Games would be another major loss, should these reports prove accurate. It’s one of the most innovative, interesting studios operating today, with a handful of unique and compelling games under its belt.
It solidified its reputation with surreal action-adventure game We Happy Few in 2018, but really came into its own with the release of the award-winning South of Midnight in 2025. This game, which explores the journey of a young woman harnessing magical ancestral powers in a fantasy version of the American Deep South, was an incredible experience.
It ended up winning a raft of awards across 2025, including the Games for Impact Award at The Game Awards, the Best New Intellectual Property Award at the BAFTA Games Awards, and more.
Despite this, the future of that ‘best new intellectual property’ is now unclear.
What’s next for these studios?
As reported by Bloomberg, it appears negotiations for the future of each studio are currently ongoing. There is reportedly some hope that they’ll be able to spin out under new management – whether as new independent companies, or alongside new buyers – but for now, this remains in flux.
In a recent memo to staff also covered by Bloomberg, Xbox CEO Asha Sharma reportedly said the current state of Xbox ‘cannot continue,’ in regards to low revenue and margins. It appears this is the latest move in the attempt to stabilise company profits.
After years of over-spending, largely on studio acquisitions like that of Activision Blizzard, it appears the company is now reckoning with the knock-on impacts. It’s a major shame these decisions are now seemingly reflecting onto hard-working studios, with developers impacted, as a result.
We’re likely to hear more on this situation in the coming months.
