Microsoft initiates massive Xbox restructuring and studio sell-offs

In an internal memo, Sharma characterized the current Xbox business model as unhealthy, citing profit margins that trail behind industry peers. The division reportedly loses 64 cents for every dollar invested, a deficit the company blames on an oversaturated gaming market. Beyond the immediate headcount reductions, the company is divesting from four key studios. Double Fine and Compulsion Games will return to independent ownership under their respective founders, Tim Schafer and Guillaume Provost. Meanwhile, Ninja Theory and Undead Labs are being sold to new owners, with contractual requirements to finish development on Senua and State of Decay 3.

The reorganization extends to Activision, Blizzard, Bethesda/ZeniMax, King, and Mojang, though leadership insists that no announced first-party titles face cancellation. Under a new management structure, Mojang and King will report directly to Sharma, while Helen Chiang steps into the newly created role of Chief Operating Officer for Xbox. Concurrently, the company is evaluating the future of Arkane Studios, which is currently navigating high costs and delays on its upcoming Blade project. Potential outcomes for the studio, including a sale or total closure, remain subject to ongoing labor consultations in France.