Xbox’s week so far: Studio closures, executive departures and exclusives

Xbox news has come flooding in after it wrapped its Summer Game Fest showcase, and little of it has been positive. This week, GamesBeat learned that the studio plans to close Compulsion Games, the studio behind South of Midnight. Now we’ve also heard that it plans to close studios like Ninja Theory and Double Fine. Alongside this, multiple key staff have announced they’re leaving the company, and rumors persist about Xbox’s wavering resolution on console exclusives. So what is happening at Xbox?Xbox studio closures and potential layoffs One of the biggest pieces of news surrounding Xbox this week is a rumor about the closure of multiple studios. GamesBeat heard from its sources that Compulsion Games is on the chopping block, and reportedly Ninja Theory and Double Fine are also in danger of the same. All three studios have delivered well-regarded games for Xbox, such as the Hellblade series, Psychonauts 2 and the aforementioned South of Midnight. Another rumor, reported by Bloomberg, is that the studios are negotiating with Microsoft to potentially buy themselves out, becoming independent rather than shut down. At present, there’s no word on whether this will happen or not. Bloomberg reporter Jason Schreier also notes that these are not the only studios in danger of closure, and that the company also reportedly plans to make layoffs after the end of the fiscal year at June 30. In addition to the studio closures, two critical members of staff revealed their departures: Craig Duncan, head of Xbox Game Studios; and Louise O’Connor, chief of staff. Both are longtime veterans of the company, having worked at developer Rare for years. In an email obtained by The Game Business, Duncan said, “When I stepped into the role of leading XGS 20 months ago, my purpose was to serve our studios, our teams, and the people making our games… I’m proud to say we delivered many flawless launches that drove business success for the company.”Why is Xbox making so many cuts? One of the most obvious questions following this news is why Xbox feels the need to shut so many studios and possibly lay off so many members of staff. The answer lies with its new leadership, particularly new CEO Asha Sharma and CCO Matt Booty. The two said in a recent memo to staff, titled “Next 100 Days: Xbox Reset,” that they plan to “reset the business.” A follow-up question would also be: Are there going to be any further cuts? In the memo, Sharma and Booty note the various problems facing the company, including “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.” They added, “We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming, and devices. In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content.”The return of Xbox exclusives Another bone of contention appears to be the topic of Xbox exclusives. Within the last few years, the company had been moving some of its previously exclusive properties to other platforms, most notably PlayStation. However, it seems that the company no longer intends to do this moving forward, as Gears of War: E-Day and Clockwork Revolution were confirmed to be exclusive. Notably, Matthew Ball, Xbox’s new chief strategy officer, said on social media that the rumor is false. He added, “There are no conversations and have been no conversations to ‘reverse course.’ And as we said last week, players can continue to expect signature exclusives from us every year.” In a recent post from analyst Joost van Dreunen, he noted that, “Sharma is gearing up for the job she was actually hired to do: whip Xbox back into shape.” This feels like a direct contradiction to Seamus Blackley’s contention that, Sharma will be “a palliative care doctor who slides Xbox gently into the night.” And it’s only Tuesday. We’ll have to wait and see what the future of Xbox looks like going forward. Sharma and Booty said in the memo: “We have made mistakes, and will continue to make them, but what matters is that we listen, learn, and adjust the course where needed. Remember, our fans are rooting for us.” The post Xbox’s week so far: Studio closures, executive departures and exclusives appeared first on GamesBeat.

Jun 17, 2026 - 05:35

Xbox’s week so far: Studio closures, executive departures and exclusives

Xbox news has come flooding in after it wrapped its Summer Game Fest showcase, and little of it has been positive. This week, GamesBeat learned that the studio plans to close Compulsion Games, the studio behind South of Midnight. Now we’ve also heard that it plans to close studios like Ninja Theory and Double Fine.

Alongside this, multiple key staff have announced they’re leaving the company, and rumors persist about Xbox’s wavering resolution on console exclusives. So what is happening at Xbox?

Xbox studio closures and potential layoffs

One of the biggest pieces of news surrounding Xbox this week is a rumor about the closure of multiple studios. GamesBeat heard from its sources that Compulsion Games is on the chopping block, and reportedly Ninja Theory and Double Fine are also in danger of the same. All three studios have delivered well-regarded games for Xbox, such as the Hellblade series, Psychonauts 2 and the aforementioned South of Midnight.

Another rumor, reported by Bloomberg, is that the studios are negotiating with Microsoft to potentially buy themselves out, becoming independent rather than shut down. At present, there’s no word on whether this will happen or not. Bloomberg reporter Jason Schreier also notes that these are not the only studios in danger of closure, and that the company also reportedly plans to make layoffs after the end of the fiscal year at June 30.

In addition to the studio closures, two critical members of staff revealed their departures: Craig Duncan, head of Xbox Game Studios; and Louise O’Connor, chief of staff. Both are longtime veterans of the company, having worked at developer Rare for years. In an email obtained by The Game Business, Duncan said, “When I stepped into the role of leading XGS 20 months ago, my purpose was to serve our studios, our teams, and the people making our games… I’m proud to say we delivered many flawless launches that drove business success for the company.”

Why is Xbox making so many cuts?

One of the most obvious questions following this news is why Xbox feels the need to shut so many studios and possibly lay off so many members of staff. The answer lies with its new leadership, particularly new CEO Asha Sharma and CCO Matt Booty. The two said in a recent memo to staff, titled “Next 100 Days: Xbox Reset,” that they plan to “reset the business.”

A follow-up question would also be: Are there going to be any further cuts? In the memo, Sharma and Booty note the various problems facing the company, including “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”

They added, “We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming, and devices. In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content.”

The return of Xbox exclusives

Another bone of contention appears to be the topic of Xbox exclusives. Within the last few years, the company had been moving some of its previously exclusive properties to other platforms, most notably PlayStation. However, it seems that the company no longer intends to do this moving forward, as Gears of War: E-Day and Clockwork Revolution were confirmed to be exclusive.

Notably, Matthew Ball, Xbox’s new chief strategy officer, said on social media that the rumor is false. He added, “There are no conversations and have been no conversations to ‘reverse course.’ And as we said last week, players can continue to expect signature exclusives from us every year.”

In a recent post from analyst Joost van Dreunen, he noted that, “Sharma is gearing up for the job she was actually hired to do: whip Xbox back into shape.” This feels like a direct contradiction to Seamus Blackley’s contention that, Sharma will be “a palliative care doctor who slides Xbox gently into the night.”

And it’s only Tuesday. We’ll have to wait and see what the future of Xbox looks like going forward. Sharma and Booty said in the memo: “We have made mistakes, and will continue to make them, but what matters is that we listen, learn, and adjust the course where needed. Remember, our fans are rooting for us.”

The post Xbox’s week so far: Studio closures, executive departures and exclusives appeared first on GamesBeat.

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