Microsoft’s Xbox division delivered its sharpest single day of first-party cuts on June 16, 2026, as reports from The Verge, Bloomberg, and Engadget confirmed that Ninja Theory – the Cambridge studio behind the Hellblade series – is being closed, with Compulsion Games and Double Fine simultaneously fighting for their futures through buyout negotiations.
Ninja Theory Told It Is Closing – Just Days After Revealing a New Game
The timing could hardly be more jarring. Ninja Theory revealed Senua, a third entry in the Hellblade universe set after the events of Hellblade II, at the Xbox Games Showcase on June 7. Sources told The Verge that Ninja Theory staffers were informed on a call on Monday about the closure, leaving the team looking for a buyer so operations can continue. The news is especially surprising given that Microsoft showcased Senua during its Xbox Games Showcase just over a week ago – a title that had been targeting a 2027 release, though its future is now unclear.
Ninja Theory was one of several studios Microsoft bought in 2018 as part of a major expansion of Xbox Game Studios.
Compulsion Games and Double Fine Also in Negotiations
Several studios in Microsoft’s Xbox gaming division, including Montreal-based Compulsion Games and San Francisco-based Double Fine, are in active negotiations to spin off as they try to thwart closure. Compulsion is the Montreal studio behind Contrast, We Happy Few, and South of Midnight, the latter of which came out in April 2025.
Kotaku updated its report to note that, according to one source, Compulsion leadership is in “negotiations” with Microsoft over the studio’s fate, but the details of those negotiations have not been disclosed.
Double Fine is the studio behind the Psychonauts games, Brütal Legend, Broken Age, and Keeper, founded by Tim Schafer in 2000. Double Fine filed an NLRB union petition on May 7 with the Communications Workers of America, covering all 42 of the studio’s regular employees. That petition is still pending – a complication that adds a legal dimension to any closure or spinoff.
The “Xbox Reset” Behind the Cuts
The closure marks the first confirmed studio shutdown under the Xbox Reset framework that CEO Asha Sharma and chief content officer Matt Booty outlined in a publicly posted memo six days earlier. An internal Xbox memo saw Sharma flagging an “Xbox Reset” amid slim profit margins and declining revenue.
Bloomberg’s Jason Schreier notes that while the studios in danger of closing have a chance to buy themselves back from Microsoft, employees are still likely to lose their jobs as a result of going independent. Sources told the publication that employees have been “given permission to seek new work” as layoffs would be likely, and the “status of the studios is still in flux.”
According to Schreier, “several other” Xbox studios beyond the three named are also in the same position.
Leadership Departures Compound the Chaos
Xbox Game Studios head Craig Duncan has also left Microsoft after 15 years, and his second-in-command, chief of staff Louise O’Connor, is also out. Longtime Xbox division head Phil Spencer stepped down earlier this year and was replaced by new CEO Asha Sharma.
The expected cuts come exactly a year after Microsoft’s huge 9,000 job cuts last summer, which saw the Xbox division hit hard.
What This Means for Hellblade Fans
Hellblade: Senua’s Sacrifice – the game that put Ninja Theory on the map and remains the studio’s most acclaimed work – is now a piece of gaming history made under a studio that may cease to exist within weeks. Whether a buyer emerges to carry on the Hellblade franchise alongside the newly announced Senua is the key question for fans of the series.
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Hellblade: Senua’s Sacrifice is available now across platforms – check live deals and pick it up from [price] before prices shift amid the uncertainty.
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