TL;DRCompulsion Games, Double Fine, and Ninja Theory are negotiating spinoffs from Xbox as Asha Sharma’s restructuring accelerates.
Three Xbox-owned studios are in active negotiations to buy themselves back from Microsoft rather than face closure, according to Bloomberg. Compulsion Games in Montreal, Double Fine Productions in San Francisco, and Ninja Theory in Cambridge, England, are each exploring deals that would make them independent again. Even if the talks succeed, many employees at all three studios are expected to lose their jobs.
The negotiations are part of a broader restructuring led by Asha Sharma, who took over as Xbox’s chief executive in February. Bloomberg reported earlier this month that Xbox was planning significant layoffs for July as Sharma attempts to reverse years of financial decline. Xbox has been considering spinning off its gaming division entirely or restructuring it as a subsidiary, though no final decision on that larger question has been made.
The three studios represent different stages of Microsoft’s acquisition strategy and different levels of commercial risk. Compulsion Games, which Microsoft acquired in 2018, released South of Midnight in May. The game reached one million players and won the Games for Impact award at The Game Awards 2025, but neither milestone necessarily translates into the kind of revenue that justifies a first-party studio’s overhead.
