Microsoft’s Xbox unit is reportedly discussing potential spinouts for studios including Montreal-based Compulsion Games and San Fransisco-based Double Fine.

The discussions come as Asha Sharma reorganizes the Xbox business, according to the report.

Sharma was named executive vice president and CEO of Microsoft Gaming on February 20, 2026.

Cambridge, England-based Ninja Theory, the studio behind Senua’s Saga: Hellblade II, and other Xbox studios are also in talks.

Employees at several studios were told they could look for new jobs while decisions were still pending.

Some studios may be able to buy themselves back and go independent, though many employees would likely lose their jobs as a result.

The talks are part of a broader reorganization at Microsoft Gaming, with plans for layoffs as the company focuses on its biggest franchises after revenue and margins fell in recent years.

The discussions follow Toys for Bob’s February 2024 spinoff, with the studio remaining open to future work with Microsoft and Activision.

🔗 Source: Bloomberg

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