Recent reports suggest Xbox may close some of its game development studios due to lower-than-expected profits this year. According to a new report from The Verge, Ninja Theory, the team behind the Hellblade series, is one of those studios. They’ve reportedly been informed about the potential closure and are hoping to be bought by another company.
Bloomberg’s Jason Schreier reports that Double Fine (the creators of Keeper and Kiln) and Compulsion Games (South of Midnight) are talking with Microsoft about becoming independent companies. This move is an effort to prevent potential closure, but even if successful, both studios are still expected to reduce their workforce through layoffs.
News that Compulsion Games might be shutting down started with a report from Kotaku. It’s currently unclear how many people at the studio would lose their jobs.
Xbox is likely to announce significant layoffs and possibly close some studios soon after June 30th, when Microsoft’s fiscal year ends. These changes are part of a plan by Xbox CEO Asha Sharma to address declining revenue. In addition to job cuts, Xbox is also expected to reduce spending in its marketing department and other parts of the company.
According to recent statements from Sharma and Matt Booty, the company is projected to finish the fiscal year with an accountability margin of around 3%, which is lower than last year. Over the past five years, we’ve invested more than $20 billion in content, our platform, and hardware, but our yearly revenue has decreased by almost half a billion dollars. This trend isn’t sustainable, and changes are needed.
Xbox is struggling with its hardware business due to increasing costs for components, which is reducing their profits. By the time Satya Nadella took over as CEO in February, the price of essential console storage parts had already doubled compared to October 2025. Unfortunately, Nadella doesn’t expect these challenges to improve anytime soon.
Looking ahead to the 2027 holiday season, we anticipate prices will be more than five times higher than they were just two years ago. Memory chip costs have risen sharply as well. Like the rest of the industry, we’re dealing with a shortage of components, but our past decisions have made us feel this impact more strongly than many competitors. Right now, we can’t produce enough consoles to meet demand, so we’re exploring new business strategies and partnerships to support our commitment to the Helix platform.
A recent report suggests that numerous game development teams owned by publishers are likely to struggle soon. French journalist Sylvain Trinel believes Microsoft’s recent layoffs are only the first wave of problems, predicting a significant downturn – even a “catastrophe” – for studios such as BioWare, Quantic Dream, and DON’T NOD.
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2026-06-16 16:44