Microsoft Xbox shuts down five first‑party studios, including Ninja Theory

Microsoft’s Xbox division announced the closure or buyout of five first‑party studios. Ninja Theory, the Cambridge studio behind the Hellblade series, will be divested but will continue developing its upcoming title “Senua” under new ownership. Compulsion Games in Montreal, Double Fine Productions in San Francisco, Undead Labs, and Arkane Lyon are also facing closure, buyout negotiations, or project cancellations, with the latter’s Marvel’s Blade game delayed.

The cuts are tied to Xbox’s Game Pass subscription model, which provides licensing fees but has not generated sufficient buy‑to‑play revenue for mid‑tier studios. Xbox Game Studios head Craig Duncan resigned on the same day the first closure was reported. The restructuring follows a period of declining gaming revenue and hardware sales, prompting Microsoft to tighten profitability targets.

Unions representing Xbox workers have condemned the layoffs, arguing that the company’s financial decisions are prioritizing executive interests over staff. The move marks a significant shift in Microsoft’s strategy for its first‑party game development portfolio.