Unfortunately, the negative news about the realignment of the Xbox division is slowly taking shape for the affected employees. According to a report from Bloomberg, several Xbox studios are apparently facing possible closure.
A few days ago, CEO Asha Sharma resigned a strategic realignment of the Xbox division which recently had to struggle with declining profit margins.
Even if Sharma has not yet specified her plans for the future of the Xbox business, it has become apparent in the last few hours that it indeed is to extensive layoffs and even studio closures could come. This was indicated, among other things the farewell to Craig Duncan who recently resigned from his position as head of Xbox Game Studios.
After The Verge published a few days ago the possible closure of studios spoke, Bloomberg now also reportsthat several studios are apparently about to go out of business.
Several studios apparently on the brink of extinction
As some players quickly speculated, it should be Compulsion Games, the studio behind it „South of Midnight“ or „We Happy Few“and meet the developers from Double Fine Productions, who recently scored points with creative concepts, but did not have particularly strong sales figures.
Interestingly, Ninja Theory is also said to be in talks with Microsoft and is threatened with closure. A development that will certainly come as a surprise, given that the British studio was only at the Xbox Games Showcase 2026 this month announced his new project “Senua”..
According to information from Bloomberg, the final word has not yet been spoken regarding the possible closure of the three studios. Instead, there is the possibility that the studios will buy back their independence from Microsoft and act as independent companies again in the future.
But even if we succeed in preserving the studios, massive layoffs are to be expected. The affected employees have been informed about the uncertain future and are now allowed to look for new positions.
Also VGC reports citing informed circlesthat above all the future of Ninja Theory, Compulsion Games and Double Fine Productions is in jeopardy.
Insiders warn of further cuts
While Microsoft and the affected studios have not yet commented on the current rumors, two well-known insiders are preparing for further unpleasant news. On the one hand, Bloomberg’s Jason Schreier shared further updates on current developments at Microsoft on BlueSky and warned that other studios could be affected.
Schreier did not name any specific names in this context, but pointed out that the Xbox division will look completely different than it currently does after the planned measures.
Other studios that could be at risk of closure include: Rumored to belong to Arkanewhich is currently on „Marvel’s Blade“ works. Well-connected industry insider Nate the Hate also hinted at further unpleasant news surrounding the Xbox division and even spoke of an impending bloodbath.
“There will be a bloodbath. Massive layoffs are expected across the Xbox division,” explained the insider.
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