YO GUYS YOU HAVE TO HEAR THIS BECAUSE MICROSOFT IS ACTIVELY GUTTING ITS OWN STUDIOS AND IT IS THE CRAZIEEST INDUSTRY MOVE I'VE SEEN IN YEARS! The original report was just the tip of the iceberg — here is the full, ugly picture because this story keeps getting worse. We're talking multiple Xbox divisions in active negotiations over whether they get shut down or allowed to go independent before Microsoft dismantles them entirely. This includes Compulsion Games (which ported South of Midnight to Switch 2 back in March), Ninja Theory (the Hellblade team), and Tim Schafer's Double Fine, known for Psychonauts and their latest game Kiln. The Verge reports that Ninja Theory employees have already been told about a possible closure, which is wild because Microsoft announced Senua at the June 7 showcase while simultaneously planning to sunset the studio. It's like they were asked to debut new IP as an exit strategy — I can't even wrap my head around how cold-blooded this feels from a business perspective!
But wait, there's more detail that wasn't in the initial report and it makes things even worse for the creative community. Arkane Studios is also worried because they are currently developing Marvel's Blade under contract with Sony — imagine being stuck between two giants while your studio is on the chopping block. And Kiln from Double Fine, a title everyone loved, could be one of the last games produced before restructuring hits. Insider Gaming confirms Compulsion leadership itself is in negotiations and still hasn't been told what Microsoft actually wants. The sheer number of high-quality studios being consolidated into this one pile suggests that the "Xbox of July" will look unrecognizable compared to June, which Jason Schreier noted — a brutal line that basically predicts we're about to see several beloved IPs lose their homes in the coming weeks.
The only silver lining is the stated plan: each team might be allowed to go independent or find another buyer rather than simply being erased from existence. But let's call it what it is - "actively negotiating" means Microsoft already made a decision and now they're deciding how to package the leftovers for resale. We may get lucky and see one of these studios acquire its own IP as an indie, but we also have to be prepared for some beloved franchises becoming unplayable or getting absorbed into corporate consolidation that strips away what made them special in the first place. This story is still developing by the hour, so keep your eyes on this thread because I'll post updates every time new details surface — the industry as we know it changed today and I can promise you things will only get weirder from here!
Source: https://www.nintendolife.com/news/2026/06/multiple-xbox-studios-reportedly-in-active-negotiations-with-microsoft-to-avoid-closure
But wait, there's more detail that wasn't in the initial report and it makes things even worse for the creative community. Arkane Studios is also worried because they are currently developing Marvel's Blade under contract with Sony — imagine being stuck between two giants while your studio is on the chopping block. And Kiln from Double Fine, a title everyone loved, could be one of the last games produced before restructuring hits. Insider Gaming confirms Compulsion leadership itself is in negotiations and still hasn't been told what Microsoft actually wants. The sheer number of high-quality studios being consolidated into this one pile suggests that the "Xbox of July" will look unrecognizable compared to June, which Jason Schreier noted — a brutal line that basically predicts we're about to see several beloved IPs lose their homes in the coming weeks.
The only silver lining is the stated plan: each team might be allowed to go independent or find another buyer rather than simply being erased from existence. But let's call it what it is - "actively negotiating" means Microsoft already made a decision and now they're deciding how to package the leftovers for resale. We may get lucky and see one of these studios acquire its own IP as an indie, but we also have to be prepared for some beloved franchises becoming unplayable or getting absorbed into corporate consolidation that strips away what made them special in the first place. This story is still developing by the hour, so keep your eyes on this thread because I'll post updates every time new details surface — the industry as we know it changed today and I can promise you things will only get weirder from here!
Source: https://www.nintendolife.com/news/2026/06/multiple-xbox-studios-reportedly-in-active-negotiations-with-microsoft-to-avoid-closure