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Well, that escalated fast. After weeks of rumors that Xbox was eyeing the axe for a handful of its studios, Microsoft made it official on July 6. And it is a big one: Xbox CEO Asha Sharma sent out a memo confirming roughly 3,200 job cuts, with about 1,600 landing right away and the rest to follow.
The headline for players, though, is what happens to the studios. Some are walking out the door as free agents. Others got sold.
Double Fine and Compulsion are independent again
Double Fine, the Psychonauts crew, is going independent seven years after Microsoft scooped it up back in 2019. Compulsion Games, the folks behind last year's South of Midnight, are cutting loose too. Here is the part that actually matters: both studios keep their IP. All of it, including anything they made under the Xbox banner, plus some runway funding from Microsoft to keep the lights on while they figure out what's next.
So Psychonauts stays with Tim Schafer and company. South of Midnight goes home with Compulsion. Not a bad outcome, all things considered.
Ninja Theory and Undead Labs got new owners
The Senua studio and the State of Decay team didn't go independent, they got sold. Ninja Theory and Undead Labs have both signed with new owners, though nobody's saying who yet, and the deals reportedly aren't fully closed. The good news is that both Senua and State of Decay 3 are said to be funded to completion under the new management, so those projects aren't dead in the water.
And Arkane Lyon? Still up in the air
The Blade developer isn't part of the spin-off or the sale. Instead, Arkane Lyon has entered mandatory consultation with its Works Council under French labor law while Microsoft weighs "potential strategic options." That's corporate-speak that rarely ends well, so we'll be watching that one closely.
It's a grim day for a lot of talented people, and 3,200 is not a small number. On the studio side, at least, independence with your IP in hand beats an outright closure. Small comfort, maybe, but it's something.
What do you make of the shake-up? Relieved that Psychonauts and Senua live to fight another day, or worried about what this says about Xbox's plans? Drop it in the comments.
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