XBOX Shakeups Begin With Senior Departures, Looming Studio Closures

Under a week since new XBOX CEO Asha Sharma hinted at changes for the future of XBOX, we're starting to see that fallout.

Craig Duncan, Head of Xbox Game Studios, is leaving the company. Duncan was the Studio Head of Rare from 2011 through November 2024 before leading Xbox Game Studios. Now, not even a full two years later, he is stepping down, according to a report from The Game Business.

"When I stepped into the role of leading XGS 20 months ago, my purpose was to serve our studios, our teams, and the people making our games," Duncan said in an email to staff. "Together, we set out to deliver high-quality games, strengthen the cultural fabric across our studios, and help shape the future of the business. I’m proud to say we delivered many flawless launches that drove business success for the company.

He's not the only one leaving the company as well; Louise O'Connor, Xbox Game Studios' chief of staff, is also stepping down. In his outgoing message, Duncan called O'Connor "a thoughtful, creative, and trusted partner who has consistently championed the craft and supported our studios with clarity and care."

We were expecting plenty of shake-ups at XBOX over the summer, and it appears that this is just the tip of the iceberg.

Compulsion Games, Arkane Lyon Also in Danger of Closing

One of the biggest takeaways from Phil Spencer's tenure as XBOX CEO was constantly acquiring studios left and right.

Two of those were Compulsion Games (South of Midnight, We Happy Few) and Arkane Studios (Dishonored, Deathloop). At the time, the move was lauded as a chance for Microsoft to focus on high-quality, award-winning exclusives, given the pedigree of both studios. However, that hasn't necessarily been the case, although South of Midnight did win several awards since its release last year.

“Nothing was definitively said [about Compulsion being in trouble], but there was nothing said to assure us that things were okay,” a source told Insider Gaming's Mike Straw. “We were just left hanging when the topic would be brought up. Just feels like a matter of time.” Kotaku has since reported that Compulsion is in negotiations with Microsoft, but what that means remains to be seen.

The studio around Arkane, however, has been far more disappointing. The Austin studio was shut down following the release of Redfall, and Arkane Lyon has been busy with Marvel's Blade, but that hasn't seen the light of day since its announcement in 2023. Straw added that employees have "real concern" about their future.

Any XBOX Layoffs Would Take Place a Year After Major Cuts at Microsoft

If all of this sounds a little familiar, it's because, well, it is. Microsoft cut 4% of its workforce last year, with many working within the XBOX division.

The video game industry continues to be dominated by layoffs, studio closures, and game cancellations. Rare's Everwild, the Perfect Dark reboot, and an unannounced ZeniMax MMORPG were just some of the games canceled due to those layoffs.

"Our platform, hardware, and game roadmap have never looked stronger," said then CEO Phil Spencer. "The success we're seeing currently is based on tough decisions we've made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities."

Not even 11 months later, it looks like XBOX is still making choices to ensure continued success in future years. Unfortunately, it looks like those choices will result in more people losing their jobs.

This is a developing story.