Studios in Microsoft’s Xbox Division Brace for Closures
(Bloomberg) — Several studios in Microsoft Corp.’s Xbox gaming division, including Montreal-based Compulsion Games and San Francisco-based Double Fine, are in active talks to split as they try to stave off a shutdown, according to sources familiar with the company’s plans.
Cambridge, England-based Ninja Theory, maker of Hellblade, is in talks with Xbox, as are many other studios in the portfolio that are at risk of closure.
Studios may still have the opportunity to buy themselves back from Xbox and become independent, but many employees would likely lose their jobs as a result, said the people, who asked not to be named because they were not authorized to speak to the press. Employees at various studios were notified of the situation and allowed to look for new jobs, but were told the studios’ situation was still changing.
An Xbox spokesperson declined to comment.
The potential closures are part of a broader restructuring overseen by Asha Sharma, who took over as Xbox’s new chief executive officer in February. Last week, Bloomberg News reported that the gaming division was planning significant layoffs. Sharma sent a memo to staff lamenting the dismal state of the business, where revenue and margins have fallen in recent years. “This cannot continue going forward,” he wrote.
Compulsion Games, Double Fine, and Ninja Theory have all made award-winning games that were not commercially successful. But even some of Xbox’s more commercially successful studios aren’t yet sure how they’ll fit into Sharma’s new role, which will prioritize the biggest franchises as the company tries to return to growth.
Compulsion Games is the developer behind South of Midnight, which was released last year. Double Fine, known for the Psychonauts series, released smaller games Keeper and Kiln last year.
Although Xbox has made major acquisitions in recent years, it faces current challenges, including its $69 billion acquisition of Activision Blizzard Inc. in a deal that will close in 2023.
Sources familiar with Microsoft’s plans said Xbox Game Studios president Craig Duncan resigned last week ahead of the layoffs. Gaming newsletter Game Business previously reported his departure.
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