Ninja Theory, Double Fine, and Compulsion Games are in talks with Microsoft about their future after reports emerged that the studios could face closure amid a wider Xbox Game Studios restructuring [1, 2]. The discussions come as the three development teams face uncertainty, with the possibility of going independent on the table. However, such a move would likely involve significant layoffs [1, 2].
The shakeup follows the recent resignation of Craig Duncan, the head of Xbox Game Studios, signaling leadership changes linked to the ongoing restructuring [1]. Xbox’s new boss Asha Sharma called the situation a company “reset,” which many interpret as preparation for major layoffs and possible studio shutdowns [1].
Microsoft has invested more than $20 billion into its gaming business over the past five years but struggles with profitability, reporting a thin 3% profit margin and a revenue decline totaling nearly half a billion dollars [1]. Satya Nadella, Microsoft’s CEO, noted that "there's more monetization of Xbox games happening on YouTube" than through Xbox itself, emphasizing a need for innovation in both hardware and games to ensure economic viability [1].
Among the studios affected, Ninja Theory recently announced the sequel to their critically recognized Hellblade game, titled Senua, at the Xbox Games Showcase about a week ago, though the project’s future is now uncertain amid these talks [1, 2]. Double Fine faced challenges after its multiplayer game Kiln, released earlier in 2026, failed commercially. The studio had also released the adventure game Keeper in 2025 [1].
Microsoft’s business reset reflects efforts to trim costs amid poor financial returns in its gaming segment, casting doubt over several high-profile studios. Negotiations between Microsoft and the studios continue as the deadline approaches for decisions on their fate [1, 2].
