Microsoft ran the layoff playbook through its gaming division again in early July, and the numbers were grim: reporting put the gaming cuts in the thousands, part of a company-wide reduction. That's the depressing part, and it's become a yearly ritual now. The strange part is what happened to the studios.
Who got out, and how
Instead of the usual quiet shutter, two well-liked studios negotiated their way back to independence. Double Fine, the San Francisco outfit Tim Schafer founded in 2000, left Xbox keeping its people, its catalogue and its next project. Compulsion Games, the Montreal studio behind South of Midnight and We Happy Few, did the same and is now independent again. Keeping your IP on the way out the door is rare in these deals, and both should be glad of it.
Ninja Theory, the Hellblade studio, wasn't so lucky. It had been flagged for closure back in mid-June, barely a week after its developers stood on the Xbox Games Showcase stage. Engadget reported the closures on June 15 and said staff were scrambling to find a buyer; the early-July confirmations firmed up who was walking and who wasn't.
The line that explains it
New Xbox chief Asha Sharma reportedly told staff in a memo that "current margins cannot continue." That's the whole thing in five words. Game Pass milestones don't pay a studio's rent the way a boxed hit does, and the division has been squeezed on that gap since the Activision Blizzard bill came due.
So: two good studios survive with their work intact, which is genuinely better than the alternative, and a lot of people still lost their jobs, which is the part that matters most and the part these announcements always bury. Both can be true. They usually are.
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