Multiple Xbox game studios are currently in negotiations to break away from Microsoft and operate independently, as the company moves forward with plans that could result in studio closures. According to a Bloomberg report by Jason Schreier, the studios involved include Compulsion Games, Double Fine Productions, and Ninja Theory.

Ninja Theory’s situation appears particularly pressing. The Verge, citing its own sources, reports that staff at the studio were told today that it is being shut down, though the team is actively looking for a buyer. This news comes just weeks after the studio revealed its new game, Senua, an action-adventure title set in the Hellblade universe, at the Xbox Game Showcase 2026 earlier this month.

Compulsion Games, the studio behind the recently released South of Midnight, is also in a difficult spot. Kotaku initially reported that Xbox was planning to shut the studio down outright, but later updated its story to say that studio leadership has entered into negotiations with Xbox, though no details about those talks have been shared.

Even if these studios successfully buy themselves out and go independent, Bloomberg notes the process could still lead to significant job losses along the way. Schreier also posted on Bluesky that Compulsion Games, Double Fine, and Ninja Theory are not the only studios facing possible closure. He added that any layoffs are not expected to happen until after June 30, which marks the end of Microsoft’s current fiscal year.

The situation follows a memo published last week by Xbox CEO Asha Sharma, titled “Next 100 Days: Xbox Reset.” In it, Sharma signaled that changes were coming, describing the company’s current studio setup as “over extended” and pointing to rising costs tied to an ongoing component crisis as a key pressure point.

Adding to the turbulence, Xbox Game Studios head Craig Duncan announced today that he will be stepping down from his role. The Bloomberg report says Duncan made that decision last week, right before the planned layoffs were set to be announced.

The full scope of the changes at Xbox remains unclear, but with negotiations still ongoing and a fiscal year deadline approaching at the end of the month, more details are likely to come to light soon.