The breakdown
Nine days. That is how long it took for one of the most exciting reveals at the Xbox Games Showcase to turn into one of the most damning stories in Xbox history.
On June 7, Ninja Theory stepped on stage and revealed Senua — a new chapter in the Hellblade series, due in 2027. The crowd loved it. On June 16, The Verge and Bloomberg reported that Xbox is closing Ninja Theory. And according to reporting from Game File, Microsoft knew before the Showcase.
Three studios on the chopping block
The list goes beyond Ninja Theory. Double Fine — the legendary studio Tim Schafer founded in 2000, responsible for Psychonauts, Brutal Legend, and Broken Age — is in active negotiations to buy itself back from Microsoft rather than be shut down outright. Compulsion Games, the Montreal studio that shipped South of Midnight just over a year ago in April 2025, is in a similar position.
Bloomberg reporter Jason Schreier also noted that several other Xbox studios are in negotiations for their futures and remain at risk. The exact number has not been confirmed.
The Showcase problem
The timing of the Senua reveal is the most damning part. IGN reports that Microsoft allegedly planned to close or spin off Ninja Theory before the Xbox Games Showcase — and showed the game anyway, believing the announcement would soften the eventual closure news.
Whether that was a calculated PR move or a hedge in case a buyer emerged, the result is the same: players watched a Hellblade 3 trailer with genuine excitement while the people who made it were about to be told their studio was closing.
How did we get here?
Microsoft spent five years acquiring studios at a historically aggressive pace — Ninja Theory and Compulsion in 2018, ZeniMax/Bethesda in 2021, and Activision Blizzard in 2023 for $69 billion. Then came the layoffs. Thousands of cuts across 2024 and 2025. Arkane Austin closed. Tango Gameworks closed. The Initiative and Perfect Dark cancelled.
Phil Spencer, the face of Xbox's acquisition era, stepped down. New CEO Asha Sharma launched a public reset. Craig Duncan, who led Xbox Game Studios, left the company on the same day the latest closures were reported. The people who built this portfolio are gone. Now the portfolio itself is being dismantled.