As part of an Xbox “reset” and a greater round of layoffs at Microsoft, four game development studios will no longer be part of Xbox Game Studios.
Per The Verge, the affected studios are Double Fine, Compulsion Games, Ninja Theory and Undead Labs.
Double Fine and Compulsion Games will now be independent again. Ownership of Double Fine and Compulsion Games will be going back to their founders, Tim Schafer and Guillaume Provost. Under Xbox Game Studios, Double Fine released the quirky game where you play as a walking lighthouse Keeper, and more recently a multiplayer game Kiln where you make its porcelain characters by using techniques pottery. Compulsion Games meanwhile shipped the critically acclaimed South Of Midnight.
Ninja Theory and Undead Labs both revealed the games they are currently working on at the recent Xbox Games Showcase. Senua, the follow-up to Hellblade II: Senua’s Saga by Ninja Theory, and State Of Decay 3, the next entry to the zombie apocalypse survival sim, reported to have agreements to ensure they will be shipped by their new onwers, yet to be publicly disclosed.
There is still an uncertain fate looming for Arkane Lyon. The last half of Arkane Studios (Arkane Austin was closed down following the release of Redfall) is still working on Marvel’s Blade, which only had a teaser reveal since its announcement in 2023 and is reported to be running over budget.
Since Arkane Lyon (Arkane Studios) is based in France, Arkane’s management is currently beginning “required consultation with its Works Council to review potential strategic options.”
In a smaller but still significant change in management, Mojang (Minecraft) and King (part of Activision Blizzard) will now report directly to Xbox CEO Asha Sharma.
The entire spectrum of Xbox spanning across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios are also affected by layoffs. No game and project has been cancelled as part of the layoffs, but these projects will now be made by less people.
Under this new management, Xbox looks to shed more of its more peculiar, indie-spirited studios. The strategy by previous CEO Phil Spencer was to bolster Game Pass by having more games on the subscription service from smaller studios, in hopes of getting more players to stay subscribed and try out games that they probably won’t buy. That was the plan, until Xbox started acquiring major third party publishers Bethesda (and the entire Zenimax company associated with it) and Activision Blizzard King.
The strategy hasn’t produced the results, however, as Sharma noted in the memo “While those businesses have created meaningful value, they did not grow at the pace we expected.”
The Xbox “reset” is set to address the big problem of Microsoft’s gaming arm: “Our business is not healthy,” in Sharma’s words.
Around 1,600 employees at Xbox are immediately affected by the Xbox “reset,” 30% of bigger layoff round in the entirety of Microsoft which sees 4,800 people losing their jobs.
An approximate total of 3,200 jobs at Xbox are planned to be cut by the end of Microsoft’s end of financial year in July 2027.