XBOX May Sell or Shut Down Ninja Theory, Double Fine, and Compulsion

XBOX is reportedly considering the sale or closure of at least three first-party studios: Ninja Theory, Double Fine, and Compulsion Games, according to a new report from The Verge.

Studios Reportedly Facing Uncertain Futures

The report claims that employees at Ninja Theory have been informed that the studio is facing closure. The developer is reportedly seeking a buyer who could keep the team operating independently rather than shutting down completely.

Ninja Theory joined Microsoft in 2018 and is best known for the Hellblade series. The studio recently appeared during XBOX’s Summer Game Fest showcase, where it revealed a new project currently targeting a 2027 release.

Double Fine is also reportedly discussing its future. Instead of closing, the studio is said to be exploring a management buyout that would allow it to separate from Microsoft and continue operating independently.

Founded by Tim Schafer, Double Fine is known for games such as Psychonauts, Psychonauts 2, Brütal Legend, Broken Age, and the recently announced Keeper.

Compulsion Games could face a similar outcome. The Montreal-based developer, known for Contrast, We Happy Few, and South of Midnight, is reportedly being evaluated for either a sale or closure. Earlier reports suggested that Compulsion Games could be among the studios affected by Microsoft’s restructuring efforts.

According to the report, several other XBOX Game Studios teams are also negotiating their futures, raising concerns about broader restructuring efforts across Microsoft’s gaming division.

Microsoft began aggressively expanding its first-party portfolio in 2018 through acquisitions that included Ninja Theory, Compulsion Games, Playground Games, and Undead Labs. The company later completed much larger deals, including the acquisitions of ZeniMax Media and Activision Blizzard.

Since then, Microsoft’s gaming business has undergone multiple rounds of layoffs as the company looks to reduce costs and improve profitability. Reports suggest that XBOX employees are preparing for additional job cuts in 2026 following an internal memo from XBOX leadership.

Broader Changes Across Microsoft’s Gaming Division

The studio uncertainty comes during a period of significant change for Microsoft’s gaming division.

In separate reports, XBOX Game Studios head Craig Duncan is reportedly stepping down from his current role. Meanwhile, Microsoft is also said to be exploring new purchasing options for gamers, including a potential buy now, pay later payment system for XBOX hardware, games, and services.

Neither Microsoft nor the affected studios have publicly confirmed the reported closures or sales discussions.