Reports indicate that Microsoft is undertaking a major restructuring of its Xbox gaming division, with several studios facing potential closures, sales, or other ownership changes as part of a broader strategic shift.
According to reports, studios including Ninja Theory, Double Fine, and Compulsion Games are among those affected. The restructuring is also said to include job reductions across several functions, including investment, operations, technology, and private credit roles.
Ninja Theory, known for the Hellblade franchise, has reportedly been informed of plans to close the studio, although efforts are said to be underway to find a potential buyer. The development has drawn attention because Microsoft recently showcased a new Hellblade title reportedly planned for release in 2027.
Reports further suggest that Double Fine is exploring options to regain its independence rather than cease operations, while Compulsion Games is also examining alternatives to avoid closure. Other Xbox studios are reportedly evaluating their future plans as discussions continue.
The reported changes follow an internal memo from Xbox leadership stating that the gaming division had expanded rapidly in recent years. Microsoft is said to have invested more than $20 billion in Xbox over the past five years while facing revenue pressures and hardware supply challenges.
The restructuring is also reportedly accompanied by senior leadership departures. Craig Duncan, head of Xbox Game Studios, and Louise O’Connor, chief of staff, are expected to leave the company.
Asha Sharma, who succeeded Phil Spencer as Xbox chief executive in February 2026, has already introduced several strategic changes, including adjustments to Game Pass pricing and a renewed focus on major franchises. Industry observers say the latest moves could signal a more selective approach to studio investments.
The reported restructuring marks a significant shift from Microsoft’s earlier expansion strategy, which included major acquisitions such as Activision Blizzard, and suggests a leaner operating model for the Xbox business going forward.
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