Double Fine, Ninja Theory, and other Xbox studios could close

Tim Schafer sits at his desk, playing with a Rubik's cube in a Double Fine documentary video.

Bloomberg reports that Compulsion Games isn't the only Microsoft studio fighting to stay open during the great "Xbox reset" announced last week by new Xbox CEO Asha Sharma.

Double Fine, Ninja Theory, and "several other studios" are at risk of closure, reports the publication, which cited undisclosed sources who are familiar with Microsoft's plans.

According to The Verge, Ninja Theory will close unless it finds a buyer, despite just having announced a new Hellblade game at the recent Xbox showcase.

Double Fine is "in active negotiations to spin off," Bloomberg says, but job losses are expected even for studios that manage to buy their independence.

Double Fine was founded 26 years ago by former LucasArts developer Tim Schafer, and is best known for Brütal Legend, crowdfunded adventure game Broken Age, and the Psychonauts series, as well as candid documentaries about the gamemaking process. The studio recently released Kiln, a multiplayer party game, and Keeper, a puzzle adventure game about a sentient lighthouse.

Microsoft acquired Double Fine in 2019 under the direction of former Xbox CEO Phil Spencer, who oversaw a spree of studio purchases, including the landmark Bethesda and Activision Blizzard acquisitions.

Schafer and Spencer appeared together at a media summit last year, a few months before Spencer announced his retirement. At the event, Schafer praised Spencer and Microsoft for respecting Double Fine's creative independence.

"When we talked about becoming acquired, it was a big thing for me, like, 'How do we keep our culture intact?'" Schafer said. "And everyone was like, 'No, we really want you to stay who you are.' And that's been true all these years … You know, creatively, we can be like, 'Hey, we want to make this game about a walking lighthouse,' and they're like, 'Cool. Sounds cool.'"

Now Xbox is "over extended," according to Sharma, although Microsoft as a whole made nearly $32 billion in profit last quarter, and has invested billions into AI.

We also learned today that the head of Xbox Game Studios and its chief of staff have stepped down.