We are following a developing and tense story alleging that multiple Xbox studios could be facing closure, with fresh reports pointing squarely at Compulsion Games and Ninja Theory. Take this with a pinch of salt — the situation is reportedly in flux and details remain unclear, but the claims are significant if true.
What Was Reported
Earlier coverage suggested Xbox may be preparing to close two studios in 2026, one of which was named as Compulsion Games, the developer behind We Happy Few and the Peabody Award-winning South of Midnight. Kotaku has since published a report alleging that Compulsion Games "is set to be shut down," while noting it is "unclear" how many people would be impacted. The studio is said to potentially employ over 100 workers right now.
The Verge is also named in reporting around this story and states that Ninja Theory — the team behind Hellblade — "is set to be closed down by Xbox," though that outlet reports the studio is "hopeful of finding a buyer."
Per updates cited by Pure Xbox, a source inside Compulsion Games claims studio leadership is "in 'negotiations' with Microsoft over the studio’s fate, but the details of these negotiations have not been disclosed." Kotaku reportedly approached Xbox for comment and received no response.
The Source & Credibility
We are relying on multiple external reports for these claims, and those outlets have provided differing levels of detail. Kotaku is the primary source being cited for the claim that Compulsion Games is set to close, and it explicitly describes uncertainty around the number of affected staff. The Verge is referenced regarding Ninja Theory and the possibility of a buyer.
- Kotaku — reported the closure claim for Compulsion Games and later updated to say studio leadership is in "negotiations" with Microsoft.
- The Verge — reported that Ninja Theory is set to be closed but may be seeking a buyer.
- Pure Xbox — has been updating the situation and highlighted the negotiation claim from an internal source at Compulsion Games.
All of this should be treated as unconfirmed and evolving. The use of terms like "allegedly" and the explicit admission of unclear impact on staffing are reminders that these are active reports, not final announcements. We also note that a request for comment from Xbox was reportedly unanswered in at least one instance.
What It Could Mean
If these reports are accurate, the immediate implication is that staff at affected studios could be at risk — although we do not have a confirmed headcount. Sources suggest Compulsion Games might employ "over 100" people today, but Kotaku explicitly says it is "unclear" how many would be impacted.
Another possible outcome, again only reported by outlets at this stage, is that some studios named (such as Ninja Theory) might seek buyers rather than face outright closure, per The Verge. One report also mentions other Xbox studios being in a similar position, with Double Fine specifically named as another studio that "appears to be in the same boat" by those tracking the story.
We should be cautious about drawing broader conclusions until official statements are made. The reports include disagreement and gaps — notably around exact staffing impacts and the status of ongoing negotiations with Microsoft — which means outcomes could still shift.
Why This Matters
This is a story that matters on multiple levels. It concerns the future of creative teams behind high-profile projects, such as South of Midnight — a game Pure Xbox praised with a 9/10 and described as an "engaging adventure that delivers soulful stories in spades." If accurate, studio closures or forced sales would also have ripple effects on the development landscape for the platforms and IP involved.
We will continue to monitor reports and reach out for official comment. For now, treat these developments as alleged and in progress — significant if true, but not yet fully verified. We’ll update readers as confirmed information becomes available.
