Eight studios. That's the count of Xbox properties acquired under Phil Spencer that are no longer part of the company. Add it up against the full slate of acquisitions made during his tenure, and you're looking at roughly 32 percent gone, with the remaining two-thirds weathering significant layoff waves of their own.
The latest round of cuts, overseen by new Xbox CEO Asha Sharma, amounts to approximately 3,000 job losses across the organization. No studios were shuttered outright this time, but two properties are being released without a confirmed buyer, leaving their futures genuinely unclear.
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The full toll of the Spencer era's studio losses
Here's the complete list of studios acquired under Phil Spencer that have since departed Xbox:
- Ninja Theory (sold to an unknown buyer, confirmed this week)
- Undead Labs (sold to an unknown buyer, confirmed this week)
- Compulsion Games (going independent, confirmed this week)
- Double Fine (going independent, confirmed this week)
- Tango Gameworks (closed in 2024, later acquired by Krafton)
- Alpha Dog Games (closed in 2024, later reopened as an independent studio)
- Roundhouse Studios (closed in 2024, no subsequent buyer)
- Toys for Bob (went independent in 2024)
Arkane Austin was also shut down in 2024. The broader Arkane label remains open for now, though Xbox has initiated the required consultation period under French labour law before any layoffs or closure can proceed at the studio's Lyon location.
That's a significant dismantling of a portfolio that, at its peak, represented Xbox's most ambitious bet on first-party game development.
Studios still inside Xbox are not in good shape either
The studios that survived the cuts are not exactly thriving. Obsidian Entertainment and Bethesda are both confirmed to have been hit by layoffs in this latest round. Both were acquired under Spencer's leadership. Bethesda is reportedly facing some of the deepest cuts in the entire restructuring, with the stated goal of refocusing the team toward new Fallout and The Elder Scrolls projects.
The logic from Xbox leadership is that concentrating resources on fewer, higher-profile projects makes sense. The practical reality is that thousands of developers are out of work, and the studios left standing are leaner than they were a year ago.
What this means for Game Pass and the games you actually want to play
Sharma has publicly maintained that Game Pass remains a priority. The key here is that the math on that commitment just got harder. With Undead Labs sold off, State of Decay 3 may no longer be obligated to land on Game Pass at all. Studios operating independently or under new ownership have no contractual reason to prioritize the subscription service.
Fewer first-party studios means fewer guaranteed day-one Game Pass titles. That's a concrete shift in the service's value proposition, not an abstract concern.
The old vision of Xbox as a platform built around an ever-expanding stable of owned studios is, at this point, functionally over. What replaces it is still taking shape under Sharma's leadership. For players following Xbox hardware like the ROG Xbox Ally X, check out our ROG Xbox Ally X settings guide for the best performance profiles while the software side of Xbox figures out its next move.
For players with games in the pipeline from affected studios, the next few months will answer a lot of questions. Compulsion Games going independent after South of Midnight is an interesting case to watch, and Double Fine's independence under Tim Schafer could unlock creative directions that weren't possible inside a major corporation. Whether those silver linings translate into actual games is the part nobody can answer yet.
Keep an eye on our gaming guides for coverage of titles coming out of these studios as their new situations become clearer. And if you want to stay across all the platform news shaking up what you play and where, our game reviews will reflect how these structural shifts land in the actual products that reach players.
