Microsoft's Xbox division is preparing to shut down or sell at least three of its game studios — Ninja Theory, Double Fine, and Compulsion Games — according to reports from The Verge and Bloomberg on Monday, June 15, 2026, as reported by Engadget.
Background on the Reported Closures
Ninja Theory employees were informed on Monday that the studio would be closing, according to The Verge, but the team is attempting to find a buyer that can keep them operational. Ninja Theory is the studio behind the Hellblade series and was featured in the recent Xbox Summer Game Fest showcase, revealing a new entry due in 2027.
Double Fine, the legendary studio founded by Tim Schafer and friends in 2000, is in active negotiations to buy itself back from Xbox rather than be closed altogether, Bloomberg said. Double Fine is known for the Psychonauts games, Brütal Legend, Broken Age, Keeper, and LucasArts adventures.
Compulsion Games, the Montreal studio behind Contrast, We Happy Few, and South of Midnight (released in April 2025), is in a similar position, according to the report.
Acquisition Spree and Subsequent Fallout
Microsoft's modern game-studio acquiring spree kicked off in 2018 with the purchase of Undead Labs, Playground Games, Ninja Theory, and Compulsion Games, plus the formation of The Initiative. This momentum continued in 2020 and 2021, when Xbox acquired eight more studios under ZeniMax Media, including Arkane, Bethesda, and id. Everything came to a head in 2022 with the announcement that Xbox planned to purchase Activision Blizzard for $69 billion, the largest acquisition in video game history. That deal finally went through at the end of 2023, after a lengthy battle with regulators.
Since the acquisitions, Microsoft has enacted multiple massive rounds of layoffs affecting thousands of employees in its gaming division, and also shuttered well-known studios, including The Initiative. Bloomberg reported that several other studios under the Xbox Game Studios banner are also negotiating for their futures and are at risk of being shut down. The Xbox Game Studios umbrella covers dozens of studios, including Arkane, Bethesda, Halo Studios, id Software, Obsidian, Playground Games, ZeniMax, and Activision Blizzard King.
| Studio | Status (per reports) | Known Games |
|---|---|---|
| Ninja Theory | Closing, seeking buyer | Hellblade series |
| Double Fine | Negotiating buyout | Psychonauts, Brütal Legend, Broken Age |
| Compulsion Games | Negotiating buyout | Contrast, We Happy Few, South of Midnight |
Leadership Changes and Industry Impact
Longtime Xbox division head Phil Spencer stepped down this year and was replaced by new CEO Asha Sharma, alongside other executive-level changes. Also on Monday, Xbox Game Studios head Craig Duncan left the company; he first took the role in October 2024. Employees across Xbox are bracing for more layoffs in 2026 after an ominous public memo from Sharma dropped in mid-June, just as the glow of Summer Game Fest fully faded, according to Engadget.
The closures and buyout talks underscore the volatility that can follow large-scale technology acquisitions. For enterprise decision-makers, the pattern of mass layoffs and studio closures after multi-billion-dollar deals highlights the importance of evaluating post-merger integration risks, talent retention strategies, and the long-term viability of acquired assets.
