Despite promises of a reset, the unveiling of a fancy new logo, and a charm offensive for its new leadership, the news at Xbox has been getting increasingly worse throughout 2026. Between massive price increases for Xbox hardware–and possibly another one soon–the fluctuating price of Xbox Game Pass, and the cancellation of funding on several collaborative projects, it has been a tough time to be a fan of Xbox. Can the news get any worse? Yes, if you’re an employee of the company–or a fan of its studios, really.
In recent weeks, Microsoft has been talking about how the Xbox division needs to start pulling its financial weight, and it has long been rumored that Xbox layoffs will start on July 6. Following a buying spree in the late 2010s and early 2020s, Xbox amassed a sizable portfolio of studios and employees, but it looks like many of them will be in the crosshairs as the gaming division aims to slim down. Several studios are reportedly up for sale, but if a buyer isn’t found, it could be the end of the road for them.
On what could be the bleakest Monday in Xbox history, we’ll be keeping an eye on all changes hitting the various studios today.
Compulsion Games
South of Midnight developer Compulsion Games will be leaving Xbox Game Studios and will once again become an independent studio.
Double Fine Productions
Double Fine Productions is also exiting Xbox and will transition back into an independent game studio.
Ninja Theory
Discussions for a new owner of Ninja Theory are underway, and the studio will continue to work on the Senua franchise.
Undead Labs
State of Decay 3 developer Undead Labs is also in talks to find a new owner and continue working on its open-world zombie apocalypse series.