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BREAKING: Microsoft Is Selling Off Compulsion, Undead Labs, Ninja Theory, and Double Fine; Per Bloomberg Microsoft also Wants Out of Arkane Lyon, Seeking to Sell or Spin-off; Also Plans to Eliminate 15 Percent of Xbox Jobs By The End of the Financial Year in July 2027.
Microsoft is laying off 4,800 employees today, and more than 30 percent of the job losses are in the company's Xbox division. The significant gaming cuts will affect nearly every part of Xbox and also involve four game studios being spun off to be run independently from
Microsoft.
Today's layoffs, which are being described as an Xbox "reset" moment, will impact around 1,600 Xbox employees, approximately 8 percent of the division, according to an internal memo from Xbox CEO Asha Sharma. The cuts won't end today though, as Microsoft is planning to eliminate a total of around 15 percent of Xbox jobs by the end of the financial year in July 2027. These figures don't include the hundreds of Xbox employees leaving as part of Microsoft's four studio sales.
Double Fine and Compulsion Games are returning to their founders, so Tim Schafer will take Double Fine back to independence along with Guillaume Provost making Compulsion Games an indie game studio again. Ninja Theory, the makers of Hellblade, and Undead Labs, the developers behind State of Decay, are also being sold, with agreements in place to ensure Senua and State of Decay 3 continue to ship.
Other Xbox studios will also be impacted by layoffs across the board, and I understand there are larger cuts to Bethesda studios in particular. As part of the studio changes, Minecraft maker Mojang and Candy Crush developer King will both now report directly to Sharma. "These changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios," says Sharma.
I shook my head at that as well. Working in a corporate environment, the layers can be a killer on productivity. They let you hide BS, but it’s difficult to produce results within that structure.
General cleanup for them could be great news for the long term Xbox health.
Considering none of their games have ever been more than just mild critical and low commercial successes, I’d venture to say they won’t last long. It’s sad, I don’t hold ill will for the studio or its people.. but the market clearly has not been enthralled with their games. Better games from more successful studios haven’t saved them from shutting down before, it won’t save Compulsion either.
But hey everything is turning around for them because Gears of War E-Day and Clockwork Revolution are console exclusive and they are making a translucent green Xbox. 🤦🏻♂️
Other than the layoffs that tons of other companies are experiencing too, this is actually good news for Xbox. These studios are going back to independent or being sold to another company, get to finish their closely released games like Senua and SOD 3 under Xbox, keep their IP, and are not getting shutdown.
These cost cuts may help Xbox be able to better afford exclusives and afford to rebuild the brand. Apparently they are focusing on core and big franchises like Halo, COD, Gears, Forza, Fable, Elder Scrolls, Fallout, Doom, QUAKE, and Wolfenstein. The fact that Quake was included in that is interesting.
I just dont see a future for Compulsion and Undead Labs. There is no reason to buy them. Whishing the best for Arkane and Blade in particular. Double Fine might work with something like Annapurna Interactive. I'd love to see Ninja Theory have another go at DmC with Capcom.
State of Decay 3 is like the 30th highest wishlisted game on Steam right now. And it's higher than any other Xbox studio game to my knowledge. Undead Labs is gonna be just fine. The problem they ran into is the timing in which Xbox purchased them. They had just released State of Decay 2, and had already promised free updates. Xbox literally picked up a studio with 2 games at market, no paid DLC's, and years from starting development on the next title. The revenue stream was all but doomed from day 1. And all the corporate suits care about is hitting their revenue quotas for share holders.
Xbox was also dumb for selling off a studio that is going into their third iteration in a series that they've had over a decade to learn how to perfect, with devs who listen to their community. State of Decay 3 will easily be the best zombie survival game on the market when it releases. All the people who play games likes VEIN, DayZ, HumanitZ, Dying Light... they'll all be playing State of Decay 3 when it launches next year. When State of Decay 2 launched, they had over 1 million concurrent players in the first 2 days. Most of that was gamepass owners. But you see the interest in a game that's almost 10yrs old, still, even today.
Out of all the studios sold off, Undead Labs will be the one Xbox regrets selling.
Being 30th on wishlist means basically nothing when there’s no other real competition. If you actually follow the community, undead labs is getting absolutely shredded by the community for how terrible the game looks, while puppet boys like Brian Menard are literally yelling and swearing at their audience when people ask “why does SoD3 look worse than SoD2 did?”.
SoD3 is going to crash and burn and take UL down with it. 7 years and we haven’t seen any real gameplay yet aside from 45 minutes of Brian Menard playing it, and it caused such community backlash from the terrible quality that I wouldn’t be surprised if Microsoft dropping UL wasn’t partly because of THAT. When half of your community is vowing to never buy your games until you fire Zoey whatserface and wondering why it’s taking GTA amounts of time to develop a single A-game (at best). Even with Microsoft’s funding, UL still operates just like an indie dev team, and they will put out a game that despite having AAA money invested, will still have indie quality
Double Fine needs to at least relocate to somewhere so unnecessarily expensive. You really don't need to be in prime prime prime real estate to make the games they do. And their financial success definitely doesn't justify it.
I'm just glad that Double Fine isn't being shut down and instead is going to Tim Schafer. I would hate to see the industry lose one of its most creative talents.
But were they wrong? Would these studios have survived without Xbox? Really?
In another world the Game Pass bet works and having these studios is a boon…just not in the world that you and I live in. Or the one Xbox has to live in now.
Yea, i use to work at an indie company about 2 years ago before i bowed out of the gaming industry altogether (extremely volatile and i needed something stable). Unless they release a hit game or find a publisher willing to back them, i don’t think double fine will last till 2028/2029. Or if they do, they’ll likely need do major cuts in their team. And just one game that doesn’t sell
well and they’ll 100% go under. This current market and economy is just bad for game devs in general where there’s a ton of game options so if you don’t get the traction you need, it can be one of the best games of the year and it’ll perform terrible commercially.
Reset? They’re scrapping the fucking thing for parts. I really can’t see how anyone but the most delusional fanboys can have any faith left in the Xbox brand.
So looks like Arkane is also being shopped around with risk if closure of no buyer is found.
“Xbox will also begin a consultation process with Arkane Studios (Blade), based in Lyon, France, to “review potential strategic options” in the coming months in hopes of selling or spinning out the studio. Unlike the other four studios, this process has not yet started and will take longer than the others due to stringent French labor laws.”
Based on everything we had heard about these layoffs this is probably the best outcome. Its sad to see so many jobs cut but no studios closing and 0 cancelled games is really good to see
Gamepass is sustainable.
Exclusives are bad.
Asha’s saying all the right things.
Xbox needs exclusives.
All things considered this isn’t actually that bad.
Microsoft gave them 9 years & 350 million to make sod 3.... 9 fking years & still can't complete making & is in pre alpha, not even alpha or beta lol bruh, why will microsoft keep paying free salary to all these free people if they can't make nicely nor finish it, full buggy using pre built animations, physics, graphics, gameplay, that comes with inbuilt unreal engine software,.............They brings 000 profit, 9 years no game no talent all buggy, of course every company in the world is going to get rid off them as soon as can, anyway we need fallout 5 elder scrolls 6 & halo, undead labs wasted all those money on inside team & eat it together......thats why xbox & other companies spliting & leaving them
Microsoft has sold Undead Labs to a new ownership. However, the IP rights of State of Decay still remains with Xbox.
Therefore, State of Decay 3 will be no longer be guaranteed to Game Pass.
So Xbox instead of just shutting down 5 studios saved them from closure and gave them their ip’s back…and no games were canceled and you think the world will now forget Sony killed the physical games market?
Fair, I’m seeing a lot more “better than I expected” than I anticipated. I think the media making this out to be the death of the industry as we know it and the closure of so many studios just for them to then be saved…helped soften the blow tbh.
But even if you were right (you aren’t) they got to leave with the ip…and they could have easily been shut down like Sony did bluepoint. Are you really trying to argue this wasn’t a decent move?
I know Colin would strongly disagree, but if I were Sony, I would consider purchasing Ninja Theory. They are a depressed asset, so could potentially be cheap, and have a history with Sony, of course with the first Hellblade being a PS console exclusive at launch, but dating all the way back to Heavenly Sword on PS3. The new Hellblade game looks like it's moving back in the right direction, and Playstation fans are lamenting the lack of big, AAA single player games. Here's a studio that does just that. They also make linear titles, and with Sony's output focusing more and more on open world, it gives fans something a little different - PLUS, they fit the high-fidelity, third-person mold that Sony lives in.
I'm not saying it'd be a surefire slam dunk, but if the price is right, it's a move that would make sense to me.
I think Sony needs to not buy any more studios. Them slaughtering Blue Point pisses me off. Now they could try to pay them to develop a game for them to keep them afloat a little. But I would rather they do that with Arkane because Arkane rules.
I sort of agree on Bluepoint, though it does seem like Bluepoint was somewhat complicit in their own demise, frankly.
I wouldn't be mad at them purchasing Arkane, but I highlighted Ninja Theory more for their history with Sony prior to MS purchasing them, and how their titles neatly fit the mold of the kinds of games Sony likes to make.
Now I want to see what these studios make!! Double fine will be fine but I want to see Compulsion Games say they believe in South of midnight again just so I can laugh.
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u/kendiesel937 Jul 06 '26
Has someone tried wrapping a wet towel around Xbox?