Several Xbox game studios are reportedly in active negotiations with Microsoft about their future, including the possibility of closure, sale, or independence. Bloomberg first broke the story of potential xbox studio closures this week, with The Verge, Kotaku, and Insider Gaming each adding further reporting.
Which Xbox studios face closure
Bloomberg’s reporting names Ninja Theory, the developer behind the Hellblade series, and Double Fine, led by Tim Schafer and known for Psychonauts and the upcoming Kiln, as studios in talks with Microsoft. Bloomberg describes both as “at risk of being shuttered,” though Microsoft may offer each team the chance to seek independence or find an outside buyer.
The Verge expanded on the Bloomberg report, noting that Microsoft has already told Ninja Theory employees about a possible closure. The studio now hopes to find an acquirer before Microsoft finalizes its decision.
Kotaku reports that Compulsion Games, whose action-adventure South of Midnight launched on Nintendo Switch 2 in March, is also in negotiations with Microsoft, though Microsoft has not disclosed the terms. Insider Gaming separately claims that Arkane Studios, currently developing Marvel’s Blade, is also concerned about its future.
Xbox studio closures and the Senua reveal
Ninja Theory announced Senua, a third game in the Hellblade series, at the Xbox Game Showcase on June 7. At the time, the reveal drew attention from fans. Reporting since then has placed it in a different context.
Game File‘s Stephen Totilo reported that the announcement served a strategic purpose. A source familiar with Microsoft’s plans told Totilo that the company hoped showing Senua would draw investor interest in Ninja Theory, even though Microsoft had already decided on a “sunset or split with the studio” before the game appeared on stage.
“Most extraordinary, Ninja Theory even debuted a new game, a third Hellblade title called Senua, at the Xbox Game Showcase 2026 on June 7. By the time that game was revealed, Microsoft had already planned to sunset or split with the studio. The thinking was that the promise of a newly announced game would help draw investor interest in the studio, a source familiar with Microsoft’s plans told Game File.”
Whether anyone at Ninja Theory’s leadership was part of that plan is unclear.
What comes next
Bloomberg reporter Jason Schreier, who led the initial reporting, wrote that the “Xbox of July will look drastically different” to the “Xbox of June,” a timeline that points to a resolution of the xbox studio closures within weeks.
All four studios could still survive in some form if buyers emerge. The original Hellblade first appeared on Nintendo Switch in 2019. If Ninja Theory finds an independent path, the status of Senua and other Hellblade IP would likely be part of any acquisition terms.
Microsoft has not issued a public statement on the xbox studio closures or on the fate of any specific team.