Microsoft is preparing to close multiple game studios within its Xbox division, including Ninja Theory, the developer behind the Hellblade series. The closures are part of a broader restructuring effort as the company seeks to make its gaming division more financially sustainable.
Ninja Theory, based in Cambridge, England, joined Microsoft in 2017 and released Senua's Saga: Hellblade II in 2024. The studio earned a Peabody Award for its work on the first Hellblade game, which tackled mental health themes through interactive storytelling. Compulsion Games, the Montreal-based studio behind South of Midnight, is also facing closure according to multiple reports.
The planned shutdowns come as Microsoft CEO Satya Nadella has emphasized the need for Xbox to become sustainable as a business. The company is reportedly considering a major spinoff of the Xbox division as part of a larger strategic reset. Bloomberg reported that multiple studios across the Xbox organization are bracing for potential closures.
Microsoft acquired a significant portfolio of game studios over the past several years, including its $68.7 billion purchase of Activision Blizzard in 2023. The company also bought ZeniMax Media, the parent company of Bethesda Softworks, in 2021 for $7.5 billion. These acquisitions dramatically expanded Microsoft's first-party studio count but also increased operational costs across the gaming division.
The restructuring marks a shift in Microsoft's gaming strategy after years of aggressive expansion through acquisitions. The closures will affect developers who have worked on both critically acclaimed titles and upcoming projects. Microsoft has not publicly announced the full scope of the planned studio closures or provided a timeline for when the shutdowns will occur.