Xbox-Owned Studios Reportedly Exploring Independence from Microsoft

Several Xbox-owned game studios are reportedly exploring ways to regain independence from Microsoft, as the company reviews costs across its gaming business. The discussions, first reported by Bloomberg, are said to involve teams that could otherwise face closure or deeper cuts during a wider restructuring.

The report named Compulsion Games and Double Fine as studios in talks with Xbox leadership. It also said Ninja Theory, the UK developer behind Hellblade, is among the teams involved in similar discussions. Microsoft has not publicly confirmed the talks, and an Xbox spokesperson declined to comment to Bloomberg.

Xbox Studios May Seek a Future Outside Microsoft

According to the report, some studios could be allowed to buy themselves back from Xbox and continue as independent companies. Such a move would be unusual, but not impossible, in a games industry that has seen publishers rethink acquisition-heavy strategies after weaker growth and rising development costs.

Independence would not automatically protect every job. Bloomberg reported that the process may still lead to layoffs, while the future of several teams remains uncertain. Employees at some affected studios have reportedly been told about the uncertainty and allowed to look for roles elsewhere while discussions continue.

The studios mentioned in the report are known more for distinctive, creative games than blockbuster franchises. Double Fine, led by Tim Schafer, is best known for Psychonauts. Compulsion Games developed South of Midnight. Ninja Theory is recognised for Hellblade and its sequel, which were positioned as prestige first-party releases for Xbox.

Why Microsoft May be Reassessing its Gaming Portfolio

Microsoft has spent heavily on gaming over the past few years. Its biggest move was the $69 billion acquisition of Activision Blizzard, completed in October 2023 after a long regulatory review. That deal gave Microsoft control of major franchises including Call of Duty, Diablo, World of Warcraft and Candy Crush.

The company's challenge is now different. Xbox must balance Game Pass growth, console sales pressure, rising production budgets and the need to show stronger returns from its enlarged studio network. Smaller teams with acclaimed but less commercially dominant games may face closer scrutiny in that environment.

For players, the immediate impact is uncertainty around future projects from some of Xbox's most recognisable creative studios. For developers, the talks reflect a broader industry shift after years of expansion, when large publishers and platform holders bought independent teams to strengthen subscription services and exclusive line-ups.

If the reported negotiations move forward, Microsoft could reduce costs while allowing some studios to preserve their identity outside Xbox. For now, the company has not announced any spin-offs, sales or closures connected to the report, leaving the future of these teams unresolved.