Microsoft has been making major changes in its gaming wing Xbox for a few months now, including the appointment of a new CEO, a large number of leadership changes, and strategy shifts. However, the company is seemingly also looking at initiating a major layoffs wave at Xbox and perhaps even a studio closure.
The new report lands from Kotaku, Xbox first-party developer Compulsion Games is being shuttered soon by Microsoft. For those unfamiliar with the studio, it"s the team behind Contrast (2013), We Happy Few (2018), and South of Midnight (2025). Its latest game was quite well received, even winning a Peabody Award for its writing. It even received a 9/10 in Neowin"s own review, highlighting its engaging storyline, gorgeous world, and curious characters.
The studio joined Xbox Game Studios in 2018, just as Microsoft announced it is acquiring Playground Games, Undead Labs, and Ninja Theory.
Despite recent listings for new staff roles, according to the new report, Compulsion Games is being closed entirely, with over 90 staff being let go. Kotaku also added that the studio"s leadership is in negotiations with Microsoft about this decision, but no official details have been revealed yet.
The report lands just as two senior managers of Xbox leave their posts at Microsoft Gaming. Head of Xbox Game Studios Craig Duncan and chief of staff Louise O"Connor originally began their journey in Rare and have been a part of Xbox for over two decades. Dunkan has been responsible for games like Kinect Sports and Sea of Thieves, while O"Connor was primarily working on Rare"s Everwild project before its cancelation.
If this report about the studio shutdown is accurate, this may just be the start of a major new layoffs wave at Xbox Game Studios. There are also rumors of Arkane Studios being heavily affected. As always, take all these reports with a grain of salt until something official materializes from Microsoft or the studios.