Xbox turmoil deepens as studio shuts and executives exit
▼ Summary
– Xbox plans to shut down Compulsion Games, the studio behind South of Midnight, following a memo warning of an Xbox “reset” and expected layoffs.
– Xbox chief Asha Sharma and content officer Matt Booty stated the business has “over extended” with its studio system and not adequately funded its franchises.
– The memo emphasized the need to reassess investment priorities between first-party exclusives, new IP, and existing franchises over the next five years.
– Craig Duncan, head of Xbox Game Studios, and chief of staff Louise O’Connor are leaving their roles.
– In May, Sharma reorganized the Xbox platform team, bringing in executives from Microsoft’s CoreAI team.
Last week, Xbox leader Asha Sharma sent a company-wide memo signaling an impending “reset” for the gaming division, with layoffs widely expected. Now, according to a report from Kotaku, that restructuring plan includes the closure of Compulsion Games, the development studio behind the upcoming title South of Midnight.
Since stepping into her role in February, Sharma has already made several high-impact moves, including lowering the price of Xbox Game Pass and locking Gears of War: E-Day and Clockwork Revolution as Xbox console exclusives. However, the internal memo, co-signed by chief content officer Matt Booty, laid out a sobering assessment of the business. It acknowledged that Xbox has “over extended” its studio network, failing to properly fund its most valuable franchises. “We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win,” the memo stated. It went on to note that a dependable stream of first-party and third-party exclusives, along with new intellectual property, is “critical to our success,” adding that the company needs to “reassess the balance between these and our investment priorities for the next 5 years.”
This news follows a report last week from my colleague Tom Warren, which suggested that the coming changes could “involve a studio closure, or changes to the Xbox studio lineup.” Xbox has not yet responded to a request for comment on the Compulsion Games shutdown.
Further upheaval is hitting the organization’s leadership. According to The Game Business, both Craig Duncan, head of Xbox Game Studios, and Louise O’Connor, the studio’s chief of staff, have announced their departures. Duncan, who previously led Rare, had only taken on his current role in October 2024.
In a separate move this past May, Sharma reorganized the Xbox platform team, bringing in several executives she had previously worked alongside on Microsoft’s CoreAI team.
(Source: The Verge)
