Ninja Theory, Double Fine & Compulsion Games Reportedly Might Spin Off From Xbox as They Face Closure - News
by William D'Angelo , posted on 15 June 2026 / 4,946 Views
Bloomberg's Jason Schreier is reporting that multiple Xbox first-party studios are in negotiations to go independent as they try to avoid being shut down. This is according to multiple sources.
Schreier specifically mentions Hellbade developer Ninja Theory, Keeper and Kiln developer Double Fine, and South of Midnight developer Compulsion Games. However, other studios are at risk of being shutters.
The sources state that even if the studios are able to buy themselves back and go independent that many employees will lose their jobs. Employees at several studios have been informed of the situations and are allowed to look for new work, but were told the status of the studios were still in flux.
Schreier on social media added, "These are not the only three Xbox studios at risk of closure, but there's still a lot of uncertainty surrounding the company's plans. More to come in the next few days and weeks. Safe to say that the Xbox of July will look drastically different than the Xbox of June."
An Xbox spokesperson declined to comment on the situation.
This follows a report earlier today that Xbox was potentially shutting down Compulsion Games and that leadership at the studio are on "negotiations" with Microsoft over the fate of the studio.
Ninja Theory, Double Fine, and Compulsion Games have released award winning games, however, none of them were commercial hits. This follows a change in Xbox leadership that is looking to put more focus on its biggest IPs like Halo, Gears of War, Forza Horizon, Fallout, and The Elder Scrolls.
The head of Xbox Game Studios Craig Duncan and Xbox Game Studios chief of staff Louise O’Connor are leaving the company this week. Call of Duty developer Treyarch Studio Head Mark Gordon is also retiring from the company after 22 years to focus on a new chapter.
Xbox CEO Asha Sharma in a recent message sent to employees stated, "It is important to have both optimism and realism as we work to reset the business."
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.
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What a waste the last decade of Xbox has been.
Fun fact: Xbox has been in its post E3 2013 era for longer than its pre E3 2013 era.
Yeah. It seems like the 360 was a lucky fluke instead of a solid foundation.
The wheels started to fall off in 2009 but it was subtle enough most people didn't notice. E3 2009 starts fine enough then becomes a Don Matrick E3. Then 2010 with all the Kinect and skittles and Skype. It had fully begun. Just the death warrant was signed, sealed and delivered in 2013.
2009 is just about the time that Phil Spencer got to be in charge of Microsoft Game Studios. He wasn't CEO yet, but I blame the downfall of Xbox 1st party studios on him.
I feel like Ian Malcom from Jurrassic Park. Been pointing out how bad Xbox has been for over a decade. And now the collapse finally happens. Xbox from 2001-2012 was amazing! It's sad to see how far they've fallen.
Internet: Those games they made suck
Also Internet: Omg how dare you shut them down.
The critism and hate towards Hellblade, South of Midnight and Keeper received when released was crazy yet now watch people pretend to be upset of those apparently crap games, studio closures.
Cant make this up.
Hellblade 2 is a forgettable experience overall though. The first game was so much better. The third game is looking promising though
I agree, and who's fault was making the experience forgettable? Microsoft or Ninja Theory?
I think spencer made them rush it out. It was a rushed game. What other reason .
So it wasnt the studio who made a mediocre game, it was Phil?... hmmm
They were under contract and clearly under pressure. With xbox trying to compete against sony, and the promise of games coming. It's pretty obvious this was a game rushed out, as other xbox games that came out to scrutiny. Just compare the first game to the sequel.
Hellblade 2 took 4 years in full production to develop. So saying its rushed is misleading and incorrect.
Spot on!
As someone who finished both Hellblade 2, South of Midnight and Keeper I would say they were all good games in their own right, and all with aspects of greatness in them. Honestly, I would probably not have bought any of them though unless they were on a sale, I played all three via Gamepass. But Xbox also asked these studios to make "Gamepass games". As late as yesterday I think I heard Matt Booty saying that they want award winning games (he is maybe still giving speeches on autopilot). The same they said while they closed Tango (Hi Fi Rush). So it really comes across as a big mess and I feel the mismanagement accusations against Xbox are appropriate.
Wow, Xbox means literally nothing.
Matt in the comments hating on Xbox layoffs.
Sony about to lay off 50% of Bungie.
Matt no where to be seen.
Cant make this any more clearer lol
I mean two things can be bad at once, with essentially equal levels of severity.
Yeah and its best to call them all out instead of just one. They are all guilty of the same crimes.
Does it shock me that these studios are most likely closing? No.
Is it still sad? Yes.
If you want to look at it positively, these studios have all at one point or another said that they were happy to join Xbox because now they have the financial backing to just focus on making the game they want; albeit that to a certain extent surely also was the PR statement they were expected to give, it will be interesting to hear some years from now how Tim Schafer & Co are looking back at their time under Xbox- are they damning the day they gave up their independence or are they content with that at least for some years they were able to do more or less just what they creatively wanted, without worrying whether their studio would survive or not (granted, I think from Tango Gameworks' closure onwards they probably started worrying again). I could imagine that for an artist, having the opportunity to once give it your all is very valuable. From the perspective of someone needing to make a living, having a job is better than not having one, so the verdict will probably also depend on whether they manage to land on their feet again.
If you can't successfully manage a studio like Ninja Theory, who were both talented and cost-conscious, then you have no business in the games business.
Big numbers out of a Halo remake and Gears of War sequel aren't impressive. Those games are going to do big numbers, regardless of their quality.
Games like Hellblade and Pyschonauts 2 are the real test of your organization. If you can't find a way to put quality games like those into enough gamer's hands, then you have no real skill for management.
Unfortunately, it now seems we're seeing what Asha was really put in place to do. Bloodsuck and wind down the Xbox division into its most balance-sheet friendly final form. Then, sell it away to an owner who will only bloodsuck it even further.
They really ought to just spin all of their studios off - Activision, Bethesda, Mojang, etc.
Of course, in the present gaming climate, they're also the potential prey of Trump-affiliated VC firms and the Saudis. If EA isnt safe from a Saudi boyout, nobody is.
Those are the exact first draft potential bloodsuckers, unfortunately. If any of them nab these companies, it's over for them.
Lol bro relax, the games simply weren't that good to sell, they had all the creative freedom they needed to make bangers and you are crying over mediocre studios making mediocre games.
And you're defending a mediocre console platform run by mediocre executives.
Lol console warring now. I play games mate, my platforms do exactly that. If shutting down mediocrity to allow more funds and time being funnelled into the bigger games, so be it.
I guess Sony is Mediocre for closing Bluepoint right? Or did you forget that?
Not console warring. Microsoft has been consistently incompetent in the gaming market, mate. They were in over their head from the beginning. Their first act as a console platform was a failed attempt to buy out Nintendo.
Wtf lol. You are crashing out. I never asked.
I just cant wait for you to call Sony mediocre when they close and lay staff soon :)
I'm not a fan when people lose their jobs. Especially, when it's due to mismanagement. I think we should ask more of our multi-trillion dollar companies.
And how do you know they were mismanaged?
Well you don’t generally close a studio that is successful. And if you’re closing a bunch of them, it implies they were all failing. Therefore, what were the managers doing letting a bunch of studios fail? Seems like they mismanaged them.
Or maybe they under preformed. Do you think the recent games they made were bangers?
If Xbox have a bunch of under-performing studios, clearly the issue isn’t an isolated issue, so Id be asking questions of those overseeing the studios as to what led them to underperform.
The problem with your logic is you have this mindset of "every studio is amazing and all mistakes made isnt the studios"
Thats not reality, thats wishful thinking. Alot of studios owned or not fail to meet expectations. Maybe the studios are simply not that good anymore. They all had chances to release games and none of them hit.
Its easy to blame the owners but whats Sonys excuse for doing the same exact things?
Where exactly did I say that ‘every studio is amazing’?
From your standpoint surely you are saying that if all these studios are being shutdown, then they have failed.
And if a company has multiple failing studios, then surely the parent company has questions to answers as to why they have so many failing studios under their umbrella.
These are also studios that MS bought within the last decade. So clearly MS saw them as successful back then otherwise they wouldn’t have bought them. Whether the problem was the studio, MS or both it still points to mismanagement at some level for them to now be deemed failires.
I didnt say you said, I said its your mindset.
For starters if these studios were so successful they wouldn't have been brought. They were brought because they needed help and funding and MS gave them that chance and unfortunately they werent successful.
Secondly, MS own alot more studios then their competitors and many others are successful, so whats your excuse for the rest? Are they managed great?
Again, maybe these studios were simply not that good.
Brought? Brought where?
You first comment in this chain is ‘how do you know [the studios] were mismanaged?’. Then here you’ve said the studios were bought as they’re successful, but now unfortunately they are. That points to MS mismanaging them, which is a poor reflection on their business.
This article is specifically about Microsoft, so post are mostly going to be about Microsoft. You can certainly point to mismanagement at other companies. Ubisoft, EA and Sony all have examples of mismanagement recently. But that doesn’t give MS a pass for their own mismanagement.
Read my reply again and slowly.
I said the studios that MS acquired needed a publisher and funding, hence why they accepted the buyout, however they failed.
You want to always point the finger above but never at the actual issue, that these companies have been Mediocre and thats why they are being closed.
MS doesn't deserve a free pass, none of them do, but you need to accept this is a buisness and in buisness, these things happen all the time on a yearly basis.
Xbox own 20+ studios, 3 or 4 of them are being closed, and your conclusion is its MS fault. What about the other 16 studios? Shouldn't they all be failing? Meanwhile Sony has closed many and they are one of the market leaders.
Maybe Gamestop will buy them? They tried (and failed) to buy eBay recently!
Didn’t Ninja Theory just reveal its next game?
So Microsoft put its game as part of its big showcase then within a month the studio is reportedly about to be closed and that game presumably cancelled.
MS probably said for them to finish their last game.
Senua was given a 2027 release date, so given the timings it would seem more likely that it is being canned.
Or the game gets hand passed to another studio. Its not always black or white.
Possibly, but usually isn’t the case unless you’re restarting development.
It pretty unheard of to switch developers when a game is around a year from release.
Or their is a slight chance the studio has 1 year left before it closes, depending how far in development the game is.
Doesn't really matter, Senua didnt exactly set the internet on fire and whether it releases or not, wont affect many gamers.
According to The Verge, it’s official. NT staffers were told today that they were shutting down.
So far NT,double fine, arkane and impulsion. There's also sighting about ID software no longer appearing on Xbox studio could be spun off. This is gonna be a bloodbath.
New video discussing these reports is now live - https://www.youtube.com/watch?v=Sy9QPXvY2gk
Wouldn't be surprised if Arkane is also on the death row. Blade is MIA and their last game death loop was a fart in the wind.
Lyon was mentioned on TPU.
I guess it depends if these layoffs are primarily focused on studios under the XGS umbrella, or if they’re across all of the wider Xbox company.
If the former, Arkane would be safe as it sits under Bethesda. If the latter, who knows.
Yes, please get out before they take you out.
343 will be on the list of the next to die if the Halo remake doesn't make enough.
I would love to see DF go over to Nintendo
But part of the studio is their mocap stuff.... which they heavily use. Without that? what are they? and will MS/Xbox allow them to take that tech with them? if someone buys them? I don't think so, Ninja theory will likely just be closed.
They spent 100 billion on new studios to get "exclusives" out of 3rd party studios that already made games for Xbox. Can you imagine if Xbox had even taken 25 billion and used it to fund 50 projects the size of Halo Infinite? Instead they blew through 100 billion trying to win via moneyhating 3rd party games. And ironically, most of those games are now playable on Playstation, including friggin Halo and Forza!
A pity for all the talents working in these studios but it was pretty much expected at some point. Any of the games released by them did not sell well..
Hopefully, John Carmack will buy idSoftware back. Microsoft is mismanaging all the brands, my favourite games from Blizzard might be affected in close future too. If they can't even make Windows great, how can they deliver amazing console experience?
If there was one of their newly purchased studios I thought was safe, it was Ninja Theory. Hope they are able to break free and remain open.
Reading into the purchase, the owner said that he said "We want to be free from the AAA machine and make games focused on the experience, not around monetization", yet Hellblade they described as "an indie AAA game".
Since then, however, they've made a Hellblade sequel and a online MP game. This doesn't scream of the freedom from AAA he wished. Sometimes, taking those AAA contracts pay the bills.
Strange that Obsidian is not one off them. Avowed was the crappiest game they made. Its was really bad. If they want still be a game studio they should do the same. I forgot The Outer Worlds 2. Two games in row that was really bad.
As much as I hated the acquiring wars, the question is would these studios have survived any longer, or even as long as this, if they had been on their own all this time.
I won't blame them if they spin off from Xbox.
