Xbox is reportedly closing Ninja Theory, Compulsion Games, and Double Fine as part of its 'reset'
Microsoft acquired the companies in 2018 and 2019
đ Microsoft plans to close three gaming studios acquired between 2018 and 2019: Ninja Theory, Compulsion Games, and Double Fine
đ The decision follows a âresetâ announced by Xbox CEO Asha Sharma, aiming to improve profitability amid declining annual revenue
đ Despite receiving resources and creative freedom, the studios failed to produce commercially successful titles that boosted Xboxâs financial performance
đŹ This move continues a trend of restructuring at Microsoft, following previous closures of other acquired studios like Tango Gameworks and Arkane Austin
After an extremely positive showing at the Xbox Games Showcase this year, reports indicate that Microsoft is set to close three studios it acquired in 2018 and 2019.
The studios that are reportedly on the chopping block are Ninja Theory (as reported by The Verge), which created Senuaâs Saga 2: Hellblade II, Compulsion Games (as reported by Kotaku), responsible for South of Midnight, and Double Fine, which recently released Kiln.
Double Fineâs social media account responded to the news with a sweating face emoji.
The news broke after new Xbox CEO Asha Sharma revealed Microsoftâs gaming division was undergoing a reset, which hinted at potential layoffs.
However, no one expected Microsoft to close three studios that it recently acquired, though itâs not all that surprising, really.
Since its acquisition in 2018, the only game Ninja Theory released was Senuaâs Saga 2: Hellblade II, which, by all accounts, didnât exactly sell well. A new game was announced at the Xbox Games Showcase called Senua, but itâs not out until next year.
Compulsion Games released South of Midnight, a game that may have attracted a few niche industry awards, but that praise never materialized into sales.
Finally, Double Fine technically released three games since its 2019 acquisition in Psychonauts 2, Keeper, and Kiln. Aside from Psychonauts 2, which was crowdfunded before Microsoftâs acquisition and a multiformat release from day one, both Keeper and Kiln werenât exactly popular by any means.
To Microsoftâs credit, all three studios were seemingly given the resources, time, and freedom to focus on the projects they wanted to make. However, none of the games they made have helped transform Xboxâs fortunes.
Clearly, Xbox CEO Asha Sharma has identified the three studios as being a drain on the coffers, especially as we recently found out that the Xbox division, while still profitable, has seen its annual revenue decline by almost half a billion in the past five years.
As Sharmaâs public memo to staff on Xbox Wire highlighted, âWe will end this fiscal year at about a 3% accountability margin, down year-over-year. Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.â
The last studios Microsoft shut down were Tango Gameworks, Arkane Austin, and two other Bethesda-owned studios.
Microsoft famously went on a buying spree between 2018 and 2021, acquiring Ninja Theory, Compulsion Games, Playground Games, Undead Labs, Double Fine, ZeniMax Media/Bethesda, and Activision Blizzard/King.
While the move sent shockwaves through the gaming industry at the time, thereâs no doubt that the acquisitions made Xbox a more bloated, and significantly more expensive division. Expect more changes to come as Xbox resets, to use Sharmaâs term.
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Adam Vjestica is The Shortcutâs Senior Editor. Formerly TechRadarâs Gaming Hardware Editor, Adam has also worked at Nintendo of Europe as a Content Marketing Editor, where he helped launch the Nintendo Switch. He also runs a retro gaming YouTube channel called Game on, boy! Follow him on X @ItsMrProducts.