{"id":5881,"date":"2026-06-16T14:01:06","date_gmt":"2026-06-16T11:01:06","guid":{"rendered":"https:\/\/www.gamermarkt.com\/blog\/?p=5881"},"modified":"2026-06-16T14:20:33","modified_gmt":"2026-06-16T11:20:33","slug":"xbox-ninja-theory-closing-double-fine-studio-shutdowns","status":"publish","type":"post","link":"https:\/\/www.gamermarkt.com\/blog\/xbox-ninja-theory-closing-double-fine-studio-shutdowns\/","title":{"rendered":"Xbox Studio Closures: Ninja Theory Shut Down, Double Fine and Compulsion Fighting to Survive"},"content":{"rendered":"\n
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Microsoft is closing Ninja Theory and putting Double Fine, Compulsion Games, and other Xbox studios at risk as part of a sweeping business reset under new CEO Asha Sharma. The fate of newly announced game Senua hangs in the balance.<\/p>\n<\/blockquote>\n\n\n\n

Microsoft has decided to close Ninja Theory, the BAFTA-winning studio behind the Hellblade franchise, according to The Verge. Employees were informed of the closure during an internal call on Monday, 15 June 2026. The shutdown is part of a massive restructuring of the Xbox division, which Bloomberg reports could affect over 1,000 jobs and lead to additional studio closures. Double Fine, Compulsion Games, and several unnamed studios are also at risk, with some actively negotiating to buy their independence from Microsoft.<\/p>\n\n\n\n

Why Is Xbox Closing Ninja Theory?<\/h2>\n\n\n\n

Ninja Theory, based in Cambridge, England, was acquired by Microsoft in 2018. Despite critical acclaim for the Hellblade series, the studio struggled commercially. Senua’s Saga: Hellblade II launched in 2024 to strong reviews but reportedly underperformed in sales. Just eight days before the closure announcement, the studio unveiled its next project, Senua, at the Xbox Games Showcase 2026, a full action-adventure game planned for 2027 on Xbox Series X|S, PC, and PlayStation 5.<\/p>\n\n\n\n

The timing shocked the industry. One analyst, speaking to IGN, described studios like Ninja Theory and Double Fine as “beloved, talent-dense, critically adored, and small” but also “wonderful for hearts and minds” while being “hard to defend in a margin review.” Microsoft has not publicly commented on the decision. The Verge reported that Ninja Theory staff are hoping to find a buyer that would allow the studio to continue operating independently.<\/p>\n\n\n\n

What Is Happening to Double Fine and Compulsion Games?<\/h2>\n\n\n\n

Bloomberg journalist Jason Schreier reported that Psychonauts developer Double Fine and South of Midnight developer Compulsion Games “are in active negotiations to spin off as they try to thwart closure.” VGC corroborated the report with its own sources. Even if these studios successfully negotiate independence, significant layoffs are expected as part of the transition.<\/p>\n\n\n\n

Double Fine, founded 26 years ago by former LucasArts developer Tim Schafer, is known for Psychonauts, Br\u00fctal Legend, and Broken Age. Its recent releases, Kiln (a multiplayer pottery party game) and Keeper (a puzzle adventure), failed to gain commercial traction. Compulsion Games, the Canadian studio behind We Happy Few and South of Midnight, was first reported by Kotaku to be facing closure. Negotiations with Microsoft about the studio’s future are ongoing.<\/p>\n\n\n\n

As recently as last year, Schafer publicly praised Microsoft’s respect for Double Fine’s creative independence: “When we talked about becoming acquired, it was a big thing for me… everyone was like, ‘No, we really want you to stay who you are.’ And that’s been true all these years.” The contrast between those words and the current situation underscores how dramatically the Xbox strategy has shifted.<\/p>\n\n\n\n

Is Arkane Also at Risk?<\/h2>\n\n\n\n

Insider Gaming reported that Arkane Lyon may also be among the studios facing an uncertain future. Gamereactor’s European edition listed Ninja Theory, Double Fine, and Arkane as all potentially at risk. Bloomberg’s broader reporting indicated that “pretty much all Microsoft-owned studios are concerned about what happens next.” Microsoft has not confirmed or denied any specific studio closures beyond what has been reported.<\/p>\n\n\n\n

The Xbox Reset: $20 Billion Spent, Revenue Declining<\/h2>\n\n\n\n

The studio closures are the most visible consequence of what new Xbox CEO Asha Sharma has called a full business “reset.” In an internal memo co-authored with Chief Content Officer Matt Booty, Sharma laid out what she called five “realities” facing the division. The most striking figure: excluding Activision Blizzard King, Xbox has spent over $20 billion on content, platform, and hardware subsidies over the past five years, while annual revenue has declined by nearly half a billion dollars during the same period.<\/p>\n\n\n\n

“Going forward, this cannot continue,” the memo stated. Sharma, who replaced longtime Xbox chief Phil Spencer in February 2026, signalled that layoffs, marketing budget cuts, and studio restructuring would all be part of a 100-day transformation plan. Bloomberg reported that the cuts are expected to take effect around 30 June, when Microsoft’s fiscal year ends.<\/p>\n\n\n\n

Senior Leadership Departures Add to the Turmoil<\/h2>\n\n\n\n

On the same day the studio closure reports surfaced, Xbox Game Studios head Craig Duncan announced he was leaving the company. Duncan had held the role for just 18 months, having been promoted in October 2024 after a long tenure at Rare. Xbox Game Studios chief of staff Louise O’Connor also departed. According to The Game Business, all Xbox studios will report directly to Matt Booty until a replacement is appointed.<\/p>\n\n\n\n

These leadership exits, combined with studio shutdowns and mass layoffs, paint a picture of an organisation undergoing a fundamental restructuring. As one WindowsForum analysis noted, Xbox is “plainly moving from acquisition-led expansion to accountability-led consolidation.”<\/p>\n\n\n\n

What Happens to Senua, the Game Ninja Theory Just Announced?<\/h2>\n\n\n\n

The fate of Senua is the biggest creative question hanging over the closure. At the Xbox Games Showcase, studio head Dom Matthews described it as “an out-and-out action-adventure game” with expanded combat, new exploration mechanics, and a story set in Senua’s vision of Purgatory. The game was confirmed for 2027 across Xbox, PC, PlayStation 5, and Game Pass.<\/p>\n\n\n\n

Three scenarios are being discussed across the industry. The most hopeful outcome would see Ninja Theory find a buyer and continue developing Senua independently, similar to how Toys for Bob separated from Activision and maintained its operations. Alternatively, Microsoft could transfer the project to another internal team. If no buyer emerges and Microsoft declines to reassign the project, Senua could be cancelled entirely. Matthews had also confirmed that Project Mara, Ninja Theory’s experimental horror title, was already shelved before the closure news, with all 85 developers moved to the Senua project.<\/p>\n\n\n\n

Xbox’s History of Studio Closures<\/h2>\n\n\n\n

This is not the first wave of closures to hit Xbox-owned studios. In May 2024, Microsoft shut down four Bethesda studios: Arkane Austin (Redfall, Prey), Tango Gameworks (Hi-Fi Rush, The Evil Within), Alpha Dog Studios, and Roundhouse Games. The Tango closure was especially controversial, coming on the heels of Hi-Fi Rush’s award-winning run. PUBG developer Krafton later acquired much of Tango’s team and the Hi-Fi Rush 2 plans.<\/p>\n\n\n\n

In July 2025, Microsoft closed The Initiative and cancelled both Perfect Dark and Rare’s Everwild. The pattern is clear: the aggressive studio acquisition strategy championed by Phil Spencer, which included the landmark Bethesda ($7.5 billion) and Activision Blizzard ($69 billion) purchases, is being aggressively unwound under new leadership that prioritises profitability over portfolio breadth.<\/p>\n\n\n\n

Timeline of Events<\/h2>\n\n\n\n