Microsoft acquired several gaming studios under its Xbox unit over the past few years. Now, some of these studios are reportedly negotiating with the tech giant to buy back their studios. A report claims that multiple Xbox-owned studios are in discussions to spin off and become independent amid concerns they could otherwise face closure as part of a broader restructuring of Microsoft's gaming business.
According to a Bloomberg report, studios including Compulsion Games and Double Fine are in active talks with Xbox leadership. Ninja Theory, the UK-based developer behind the Hellblade series, is also reportedly involved in similar discussions, along with several other studios across Microsoft's gaming portfolio.
The report cited people familiar with the matter who said the studios may be given an opportunity to buy back from Xbox and continue operating independently. However, the process could still result in job losses, and the future of several teams remains uncertain. Moreover, Microsoft has not publicly commented on the report. An Xbox spokesperson has also declined to comment when contacted by Bloomberg.
Xbox-Owned Studios Seeking Independence Amid Microsoft's Gaming Restructuring
The reported negotiations come as Xbox undergoes a wider reorganisation under CEO Asha Sharma, who took over leadership of the gaming division earlier this year. Bloomberg previously reported that Xbox is planning significant layoffs as the company attempts to address declining revenue and profit margins. In a memo to employees, Sharma reportedly acknowledged the challenges facing the business and wrote: "Going forward, this cannot continue."
The restructuring is expected to place greater emphasis on Microsoft's largest gaming franchises as the company seeks to return the division to growth. While studios such as Compulsion Games, Double Fine and Ninja Theory have received critical recognition for their games, Bloomberg noted that many of their titles did not achieve major commercial success. This has reportedly raised questions about how such studios fit into Xbox's future strategy.
Compulsion Games is known for South of Midnight, which launched last year. Double Fine, led by veteran game developer Tim Schafer, is best known for the Psychonauts series and recently released titles including Keeper and Kiln. Meanwhile, Ninja Theory is recognised for the Hellblade franchise and has been part of Microsoft's first-party studio lineup since Microsoft's acquisition of the studio in 2018.
Employees at some affected studios have reportedly been informed of the uncertainty about their futures and given permission to explore other job opportunities while discussions continue. These actions have been taken even as Microsoft has made substantial efforts in gaming in recent years, including its $69 billion buyout of Activision Blizzard, which was finalised earlier this year in 2023.
In addition, Bloomberg reported that the head of Xbox Game Studios, Craig Duncan, had recently resigned prior to these anticipated layoffs.
