Xbox studios Double Fine, Ninja Theory, and others “at risk of being shuttered” according to new report — “active negotiations” for independence are ongoing

Hours after it was reported that Xbox’s South of Midnight developer Compulsion Games may soon be closed by Microsoft, a new report has come to light that suggests several other Xbox Game Studios developers may be on the chopping block as well.

According to Bloomberg and its sources familiar with Microsoft’s plans, both Double Fine Productions and Ninja Theory are, like Compulsion Games, “at risk of being shuttered,” and are in “active negotiations to spin off” from Xbox. Reportedly, “several other studios” are in this situation as well.

Double Fine is best known for Psychonauts, Keeper, and its new pottery-based party brawler Kiln, while Ninja Theory is responsible for the dark fantasy action-adventure series Hellblade; just days ago, the latter unveiled a new Hellblade game called Senua during the Xbox Games Showcase.

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According to a source that spoke with The Verge, Ninja Theory’s closure is happening, though its staff are “hoping the studio will find a buyer.”

Also, the studios Microsoft is considering shutting down may have a chance to buy themselves back from Xbox and become independent developers, Bloomberg says, though many employees will still ultimately lose their jobs no matter what. Workers have been informed and have been given leave to look for new opportunities while negotiations continue.

It’s worth noting that earlier today, it was reported that both Xbox Game Studios head Craig Duncan and its chief of staff Louise O’Connor will either soon leave Microsoft or have already.

Screenshot of Keeper on Xbox Series X.

Double Fine’s mysterious and eccentric puzzle adventure game Keeper was a huge hit with those who played it, but unfortunately it wasn’t a major commercial success. (Image credit: Windows Central)

Reportedly, these upcoming closures and cuts are part of Microsoft’s upcoming 100-day “Xbox reset,” a major reorganization of Xbox as a business led by its new CEO Asha Sharma. Last week, Bloomberg reported that this turnaround would be accompanied by significant layoffs in July.

Notably, this news also comes just a few short days after it was separately reported that a complete restructuring of Xbox is “on the table,” with Microsoft apparently considering making Xbox a subsidiary of the firm while simultaneously focusing on new entries in its biggest franchises like Halo, Fallout, and The Elder Scrolls.

All signs point to Sharma and Xbox as a whole making the success of its biggest and most profitable franchises its top priority following its steady business decline, which would explain why these studios specifically are at risk of being cut away from Microsoft; South of Midnight, Keeper, and the Hellblade titles are all critically acclaimed and highly rated, but haven’t been the most commercially successful.

In the end, regardless of Microsoft and Xbox’s reasoning for these potential shutdowns, it’s devastating to know that even more layoffs are likely coming on top of the thousands and thousands that have already racked the industry in recent years. Just last year, Xbox closed The Initiative and canceled Everwild, ZeniMax’s new unannounced MMO, and Perfect Dark.

Whether Compulsion Games, Double Fine, Ninja Theory, and others either close or are able to shift to independence, I hope the process goes as smoothly as it possibly can, and that all developers affected are able to find new positions elsewhere as soon as possible.

Are you upset that Microsoft and Xbox may soon close these studios down? How are you feeling about the whole situation? Let me know in the comments.

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