Xbox’s studio portfolio may look very different, very soon.
Earlier this week, reports suggested Microsoft’s games division was in the process of closing or spinning off several of its subsidiary studios. Though no studio closures have been officially confirmed yet, some employees have posted on social media that they are looking for work.
Here is everything we know right now.
Every Xbox studio rumored to be closed or spun off
Per Bloomberg, the focus is on three studios: Compulsion Games, Double Fine, and Ninja Theory.
Compulsion is best known for South of Midnight, an action-adventure game based on southern U.S. folklore that won many accolades in 2025. PCMag called it “beautiful, unique, and tear-jerking,” and it won a Peabody Award last year.
Compulsion was said to be closing and then to be negotiating with Microsoft for its future, according to Kotaku. Some Compulsion employees have said they are looking for work, but the studio hasn’t officially shuttered or been spun off yet.
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Double Fine is the most venerable of the three, having been around for more than 25 years. The San Francisco-based studio is best known for creative games with a focus on sharp comedy writing, like Brutal Legend, Psychonauts, and Costume Quest.
Double Fine’s fate is murky at the moment; the only thing we’ve heard from the company is a single sweating face emoji posted to its social accounts earlier this week.
The third studio rumored to be closed or spun off is Ninja Theory, which has been around in some capacity for more than 25 years. Prior to becoming an Xbox subsidiary, Ninja Theory was best known for highly cinematic action games that made early use of performance capture technology — such as Heavenly Sword and Enslaved Odyssey to the West, both of which featured performances by Andy Serkis.
More recently, Ninja Theory has been focused on the Hellblade series. The third game in that series, Senua, was announced earlier in June.
Other unnamed studios are also said to be at risk. Insider Gaming’s Mike Straw reported that Arkane, developers of the Dishonored series and the upcoming Marvel Blade game, is fearing for its future right now; we don’t know anything beyond that.
Xbox’s problems go back many years, but the current round of anxiety started when former executive Phil Spencer left, leading Microsoft to hire AI executive Asha Sharma to take over the Xbox business.
Sharma has tried to win the hearts and minds of fans by teasing the next Xbox console, codenamed Project Helix, but Xbox’s reputation is not in the best place right now.
Between possible studio closures, game cancelations, and a movement to boycott Xbox due to Microsoft’s relationship with the Israeli military, many gamers have already decided they are done with the brand entirely.
