After weeks of rumor and speculation about the extent of Xbox’s planned cutbacks, CEO Asha Sharma announced the extent of Microsoft’s reorganization: 3,200 employees will be laid off, and at least four studios are being affected, including Double Fine Productions and Ninja Theory.
Of the 3,200 employees that are being laid off throughout Microsoft’s 2027 fiscal year, 1,600 are being affected today, Sharma said in a memo published to Xbox Wire. Sharma calls the cuts “most significant restructure in XBOX history.”
The four studios “[leaving] XBOX to new management” were all part of Microsoft’s studio spending spree in 2018-2019, when the company purchased seven independent studios. Four of those are leaving the Xbox Game Studios umbrella, and a fifth is under review.
Here’s what we know.
Compulsion Games and Double Fine Productions are going indie
“Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games,” Sharma said.
Microsoft acquired Contrast developer Compulsion Games in 2018, while the studio was working on We Happy Few for publisher Gearbox Publishing. As part of Xbox Game Studios, Compulsion released one game, South of Midnight, in 2025.
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