Xbox Studios Reportedly Seek Buyouts As Closure Fears Spread Beyond Compulsion
Compulsion Games, Double Fine, Ninja Theory, and several other Xbox studios are reportedly trying to avoid closure as Microsoft’s gaming reset grows more severe.
Xbox’s latest restructuring reports are becoming more alarming. After earlier claims that Compulsion Games could be shut down, new reporting now suggests several Xbox studios are trying to negotiate their way out of Microsoft ownership before closure decisions become final.
According to Gematsu, citing Bloomberg, Compulsion Games, Double Fine Productions, Ninja Theory, and other Xbox studios are reportedly in talks with Microsoft as they attempt to avoid being shut down. Some could potentially spin off as independent studios, similar to how Toys for Bob separated from Activision after Microsoft completed its acquisition. The situation appears different for Ninja Theory. The Verge reports that Xbox is closing the Hellblade studio, with employees reportedly informed during a call. The best remaining outcome may be finding another company willing to acquire the team, though Microsoft has not issued a public statement confirming the closure.
That makes the future of Senua uncertain. Ninja Theory revealed the new Hellblade related action adventure game just over 1 week ago during the Xbox Games Showcase 2026, positioning it as a broader evolution of the series with more exploration, combat, and puzzles.
The most hopeful part of the report is that Compulsion Games and Double Fine may still be negotiating a spin off. Compulsion recently released South of Midnight, while Double Fine remains one of Xbox’s most creatively distinct studios after Psychonauts 2.
If those negotiations succeed, Microsoft could avoid repeating the full damage of past studio closures while still reducing costs inside Xbox Game Studios. If they fail, Xbox could lose several of its most unique creative teams in one restructuring wave.
Bloomberg’s Jason Schreier also wrote that several Xbox studios are negotiating with Microsoft to avoid closure and that many teams remain unsure of what is happening.
"Several Xbox studios, including Compulsion, Ninja Theory and Double Fine, are negotiating with Xbox as they try to avoid closure. Some or all could spin off."
— Jason Schreier
BREAKING: Several Xbox studios, including Compulsion, Ninja Theory and Double Fine, are negotiating with Xbox as they try to avoid closure. Some or all could spin off. Lots still in flux as many studios remain unsure about what's happening. Here's the latest: www.bloomberg.com/news/article...
— Jason Schreier (@jasonschreier.bsky.social) June 16, 2026 at 4:16 AM
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These reports follow the Next 100 Days: Xbox Reset memo from Xbox CEO Asha Sharma and Matt Booty. In that memo, Xbox said it had become overextended across subscription, streaming, devices, cloud, and first party production. The memo also said Xbox is ending the fiscal year at around a 3% accountability margin, while annual revenue declined by nearly US$500 million over the past 5 years despite more than US$20 billion in investment excluding Activision Blizzard King.
"Going forward, this cannot continue."
— Asha Sharma and Matt Booty
That line now carries more weight. Xbox’s reset is no longer just about leadership changes, hardware strategy, Game Pass economics, or Project Helix. It is now hitting the studio portfolio directly.
This is the most damaging version of the Xbox reset.
Microsoft may believe these cuts are necessary to fix margins, reduce risk, and focus investment on major franchises like Halo, Gears of War, Forza, Fallout, and The Elder Scrolls. From a corporate finance view, the logic is clear. Xbox spent too much, spread itself too thin, and failed to generate enough return.
But from a player and creative industry view, the damage is massive.
Compulsion, Double Fine, and Ninja Theory are not interchangeable support teams. They represent the part of Xbox that could still surprise players. South of Midnight, Psychonauts 2, and Hellblade were not simply content units. They gave Xbox personality outside its biggest blockbuster brands. If those studios disappear or are forced to fight for survival through buyouts, Xbox risks becoming more financially disciplined but less creatively interesting. That may help the balance sheet, but it weakens the argument that Xbox Game Studios is still a diverse creative home.
The best outcome now may be spin offs that keep teams alive, even if they leave Microsoft. But the fact that several studios are reportedly negotiating to avoid closure shows how deep the crisis has become.
Xbox wanted a reset. The question now is how much of its identity survives it.
Would you rather see Microsoft spin off studios like Double Fine, Compulsion, and Ninja Theory, or keep them inside Xbox with smaller budgets?
