Report: Multiple Xbox game studio heads negotiating with Xbox to avoid closure
Multiple high-profile Xbox Game Studios are negotiating with Microsoft to spin off as independent companies to avoid closure as part of a broader restructuring of the Xbox division.
According to Bloomberg, studios including Compulsion Games (South of Midnight, We Happy Few), Double Fine Productions (Psychonauts 2, Keeper), and Ninja Theory (Hellblade series) are “in active negotiations to spin off” from Xbox. Several other unnamed studios are reportedly also at risk of closure and pursuing similar deals.
The situation emerged following Xbox CEO Craig Duncan’s departure and announcements of an “Xbox reset” by new CEO Asha Sharma. The closures are part of Microsoft’s effort to shut down less-profitable game development operations. Notably, Ninja Theory had just announced a new Hellblade game titled Senua during the Xbox Games Showcase on June 7.
The studios are exploring opportunities to buy back Microsoft’s stake in their companies or secure alternative financial backing to reclaim independence. However, these negotiations are not guaranteed to succeed, and employees at affected studios have already been given permission to seek employment elsewhere.
Even if the spin-off negotiations succeed, significant challenges remain. Studios that achieve independence would lose Microsoft’s funding and operational support, making survival uncertain. Bloomberg reports that layoffs are expected at studios that do successfully become independent.
The three major studios in negotiations were all acquired by Microsoft within a two-year period during an earlier expansion phase, making these potential closures particularly notable given their relatively recent acquisitions.
Sources
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