this post was submitted on 17 Jun 2026
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Another Xbocalypse begins: Microsoft are reportedly closing or spinning off Double Fine, Ninja Theory and Compulsion (www.rockpapershotgun.com)
submitted 3 days ago by alyaza@beehaw.org to c/gaming@beehaw.org
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Xbox are reportedly closing or spinning off Psychonauts developers Double Fine, Hellblade studio Ninja Theory, and South of Midnight creators Compulsion Games, as Microsoft commence efforts to yet again "reset" their billion dollar gaming business after already laying off thousands of staff, cancelling games, and closing several studios over the past couple of years.

All three studios are apparently now haggling for their continued existence, as the end of Microsoft's financial year looms, with many other Xbox teams said to be affected, and certain employees quietly encouraged to start seeking work elsewhere.

The report comes from Bloomberg, who cite anonymous staff at several studios. The Verge (paywall) also have an article in which they claim that Ninja Theory are in the process of trying to find a buyer, after being informed that they will be closed on Monday. Ninja Theory have literally just announced a new Senua game. Like, days ago.

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[–] th_in_gs 1 points 12 hours ago* (last edited 12 hours ago)

Honestly, they need to do this. It can’t be possible to manage that many studios from the top of the Xbox organization. And, without market pressure as a clear feedback mechanism, it’s got to be difficult for the managers of the studios too.

The original sin here was buying so many and trying to become some game-production monopoly. The whole plan was crazy.

Hopefully this is good for the industry long-term. I’d love to see a bunch of independent studios pop up run by the people Microsoft temporarily ingested.

To be clear, this is terrible for the people involved, and it is all Microsoft’s fault (or, at least, Phil Spencer era Xbox’s fault - never understood why he was so respected inside or outside of Microsoft when he kept making one surely-obviously-bad decision after another). But it was surely inevitable.

[–] CaffeineTwo@piefed.world 1 points 1 day ago

please for the love of god like doublefine survive!!

[–] Criptic_Lynx@lemmy.zip 2 points 2 days ago (1 children)

Man fuck Xbox and fuck Microslop. Why even let them announce Senua if they're gonna get shut down days later?

[–] th_in_gs 1 points 12 hours ago

They’re trying to spin the studio off without shutting it down. This allows them to talk about their ongoing/future work publicly.

[–] supersquirrel@sopuli.xyz 2 points 2 days ago* (last edited 2 days ago) (1 children)

There was never any other realistic option here, Microslop is too dysfunctional and lost in the fake AI "revolution" to ever hold on to game developer talent.

[–] definitemaybe@lemmy.ca 3 points 2 days ago* (last edited 2 days ago) (1 children)

I've been thinking about this, and I think it's likely mostly to do with cashflow. They won't say that, of course, since implying any cashflow challenges is a massive red flag for analysts, but it's the only thing that makes sense.

Basically:

  1. Microslop is all-in on AI.
  2. AI infrastructure is incredibly expensive to build, requiring intensive capital investment over years to build out capacity.
  3. AI models are incredibly expensive to train.
  4. Microslop's gaming division also requires intensive capital over years to deliver games.
  5. Microslop has finite cashflow available to reinvest in long-term bets.
  6. Microslop has to choose where to allocate it's capital investments, and gaming is less attractive to upper management than AI.

Because AI is the "it thing" right now, the reputational harm to Microslop for, well, being called Microslop because of their self-inflicted sloppening and the reputational harm from writing off all their investments in gaming is less than the perceived reputational harm they would face if they weren't seen as being technology leaders in the AI space.

So, it all comes back to the AI bubble; investors are pumping up any company "doing AI", so it's become the target that Microslop cares about, and is redirecting all available cashflow in a mad gold rush to establish Copilot and their agentic OS, regardless of all consequences.

On the plus side, the world will be a better place with more investment in open software, so Microslop imploding will be fantastic... But that's not going to do anything, at least not now, for the tens of thousands of laid off employees as they crash and burn.

[–] supersquirrel@sopuli.xyz 3 points 2 days ago* (last edited 2 days ago)

What pisses me off so much about the AI bubble as someone who was trained in science is the basic obvious fact that if you have a magic tool that can "solve any problem" but that takes a nearly impossible amount of energy to do so, taking so much energy that everything else has to be sidelined in order to power this magic problem solving tool..... than you are just restating that the tool you have is incapable of problem solving.

Suppose there are two problem solving machines A and B. Problem solving machine A does not work very well but it takes a small amount of energy and material to function, problem solving machine B is like AI in that it can tackle "any problem" if given nearly all the electrical power and computer chips that humans can produce.

Both problem solving machine A and B are equally useless even though the owners of problem solving machine B can make grandiose claims about the power of their problem solving machine if they conveniently exclude the "energy required" part, which as someone trained in science ends up seeming pretty damn similar to someone arguing that their perpetual motion machine is capable of perpetual motion so long as we feed all of the electrical power humanity can generate into it...

If your Oracle requires all the investment, electrical energy and computer chips earth can produce and more to tell you the future, it is not an Oracle but rather your own demise twisted into a promise of absolute power and knowledge.

Anybody who understands computer science should be able to grasp the basic idea that it is trivially easy to describe infinitely powerful computer programs that take essentially infinite time and energy to compute, that doesn't mean anything, in fact most of computer science has been the proactive study of how to rigorously talk about programs that are impossible to execute because of outsized material demands and develop an overarching theory of computer science that nonetheless accounts for that theoretical axis. Computer science people thus should be well equipped to understand AI is just bullshit being sold as genius by disguising the cost per unit of intelligence........ but they don't really seem to grasp that basic aspect of physics in how it limits computation and it doesn't say a lot of good about the whole industry.

[–] pinball_wizard@lemmy.zip 1 points 2 days ago

Aw. Gee whiz. They promised not to close studios, as long as they're allowed to do illegal mergers.

I'm beginning to mistrust CEO promises.

I'm sure they'll do their best, in the future.