Several Xbox Studios at Risk of Closure, in Talks to Become Independent

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Okay, so I just saw a new report – Jason Schreier over at Bloomberg is saying that some of the game studios Microsoft owns directly (like, first-party Xbox teams) might be getting shut down or turned into independent companies. It sounds like they’re having conversations about it right now, which isn’t great news if you’re hoping for more games from them.

The development teams highlighted include Compulsion Games, known for games like We Happy Few and South of Midnight, Double Fine, the creators of Psychonauts, and Ninja Theory, famous for Hellblade.

So, I’m hearing from some reliable sources that the studios are actually trying to become independent to avoid being shut down. Apparently, they’re in serious talks about spinning off – basically, becoming their own thing – to save themselves. It’s pretty intense!

Okay, so things are changing fast with this story. I just saw Kotaku put up a new update to their article, and I’m keeping an eye on it as it unfolds.

People at the studio say Compulsion Games is talking with Microsoft about what will happen to the studio, but they haven’t revealed any specifics about those discussions.

These talks might lead to the studio becoming independent again, but we’ll have to see what happens next to confirm.

There have been a lot of rumors this weekend that Microsoft might close some of its video game studios. This comes as the company’s new leaders try to deal with significant challenges.

Rumors of job cuts have been circulating online, and Kotaku reports that Compulsion Games, the studio behind South of Midnight, is likely to be one of the first affected.

It’s really sad to hear about the layoffs at the We Happy Few studio. We don’t know exactly how many people lost their jobs, but LinkedIn shows around 90 employees were working there. It’s tough considering Microsoft bought them back in 2018, just before We Happy Few came out.

Several people working at the studio, including writer Zaire Lanier from the game South of Midnight, have shared on social media that they are seeking new jobs. However, as of now, the studio hasn’t made any official statement about this.

Xbox Game Studios head Craig Duncan has stepped down from his position after less than two years, according to reports from The Game Business. Louise O’Connor, his Chief of Staff, has also left the company.

This weekend, Microsoft CEO Satya Nadella stated that Xbox needs to be self-sufficient after being supported financially for 25 years. He also pointed out that Xbox games are earning more money through views on YouTube than they are directly through Microsoft.

South of Midnight has received several awards, including the Games for Impact award at last year’s The Game Awards. It came out on PlayStation 5 earlier this year, and we called it a beautifully simple game.

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2026-06-16 00:37