Xbox has confirmed it will cut around 3,200 jobs, roughly 20% of its workforce, and part ways with five studios as part of what CEO Asha Sharma calls the most significant restructure in Xbox history. Crucially, no studio closures or game cancellations have been announced in this move.
- Double Fine and Compulsion Games become independent studios and keep their IP and back catalogues.
- Ninja Theory and Undead Labs are being sold to undisclosed buyers, with funding committed to finish the next Senua project and State of Decay 3.
- Arkane’s French studio will be divested, pending France’s legally required Works Council consultation.
- Sharma says none of Xbox’s publicly announced first-party games are being cancelled, and Bethesda will reportedly refocus on Fallout, The Elder Scrolls, Doom, Quake and Wolfenstein.
The one piece of genuinely good news: despite earlier reports that closures were on the table, no studios are being shut down and no announced games are being cancelled as part of this restructure.
Where the five studios are going
The departures split into three different arrangements, and the differences matter for what happens to each studio’s games.
| Studio | Known for | What happens next |
|---|---|---|
| Double Fine | Psychonauts, Keeper | Released as independent, keeps its IP and catalogue |
| Compulsion Games | South of Midnight | Released as independent, keeps its IP and catalogue |
| Ninja Theory | Senua’s Saga: Hellblade | Sold to an undisclosed buyer, Senua development funded |
| Undead Labs | State of Decay | Sold to an undisclosed buyer, State of Decay 3 funded |
| Arkane (France) | Dishonored, Marvel’s Blade | Divested, pending Works Council consultation in France |
Double Fine and Compulsion get the cleanest deal, returning to independence with their intellectual property and enough runway for their next games. Ninja Theory and Undead Labs have entered terms with new owners, whose identities remain undisclosed while the deals complete. That should calm some nerves after reports that Ninja Theory was hunting for a buyer to avoid closure, and after State of Decay 3 was reportedly at risk of cancellation. Both projects now have committed funding.
Arkane’s situation is the murkiest. The Dishonored studio, which was reportedly facing closure and the cancellation of Marvel’s Blade, will be divested instead, but French law requires consultation with the studio’s Works Council before any structure or new owner can be confirmed. Staff and players will be waiting on that process before learning anything concrete.
What’s changing inside the rest of Xbox
Sharma’s note is unusually frank about why this is happening. Xbox aggressively expanded its studio portfolio from 2018 onwards, but the business did not grow at the expected pace, and she now says Xbox is “not the best home for every type of studio”. The reset was first signalled when Microsoft began a 100-day review of the Xbox business, with Sharma telling staff that annual revenue had fallen nearly half a billion dollars in five years while hardware costs quadrupled.
The remaining organisation is being tightened accordingly. Mojang and King now report directly to Sharma, and Helen Chiang becomes Xbox’s first Chief Operating Officer, with end-to-end profit-and-loss responsibility across content, hardware, platform and services. Cuts will land unevenly across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang and Xbox Game Studios, with the platform business taking a heavier share. According to Bloomberg, Bethesda will pivot towards its biggest franchises: Fallout, The Elder Scrolls, Doom, Quake and Wolfenstein.
FAQ
Which studios are leaving Xbox?
Five studios are departing: Double Fine and Compulsion Games become independent and keep their IP, Ninja Theory and Undead Labs are being sold to undisclosed new owners, and Arkane’s French studio will be divested pending a Works Council consultation required under French law.
Are any Xbox games being cancelled in this restructure?
No. CEO Asha Sharma confirmed that none of Xbox’s publicly announced first-party games or projects are being cancelled, and funding has been committed to complete the next Senua project and State of Decay 3 under new ownership.
How many jobs is Xbox cutting?
Xbox plans to cut approximately 3,200 jobs during its current financial year, around 20% of its workforce, with roughly 1,600 role eliminations happening immediately and the platform business taking a heavier share of the cuts.
Does this affect Xbox or Game Pass in the UAE?
Not immediately. The restructure is internal, so consoles, Game Pass and existing games remain available as normal in the UAE. The longer-term change is that future games from the five departing studios may be published as multiplatform titles rather than Xbox exclusives.