Two studios still unsold
When Xbox CEO Asha Sharma announced the biggest restructuring in the brand’s history on July 6, two of the four studios being cut loose had a clear landing spot: Double Fine Productions and Compulsion Games would go independent, with ownership reverting to founders Tim Schafer and Guillaume Provost respectively. Ninja Theory and Undead Labs got a vaguer fate, described as being sold off. Six weeks on, that sale still hasn’t produced a named buyer for either studio, leaving Senua’s next chapter and State of Decay 3 in a holding pattern.
The numbers behind the move are the largest Xbox has posted: roughly 3,200 roles cut through fiscal year 2027, with about 1,600 eliminated immediately on day one. In her memo, titled “Resetting XBOX” and published on Xbox Wire, Sharma was blunt about why: “Our business today is not healthy. We are operating at margins that are three to 10 times lower than comparable platform and publishing businesses. We must reset Xbox.” The cuts landed alongside a separate wave of roughly 4,800 layoffs elsewhere at Microsoft the same week, putting the combined immediate toll near 6,400 jobs.
Microsoft has said the in-development games at both unsold studios, Ninja Theory’s Senua project and Undead Labs’ State of Decay 3, will continue to receive funding through completion regardless of who ends up owning the studios. That’s a meaningful commitment on paper, but it leaves open harder questions a new owner will ultimately decide: whether either game stays a platform exclusive, what happens to Xbox Game Pass day-one availability, and whether the studios’ current staff and leadership survive an ownership change intact. None of that can be answered until a buyer is actually named. The delay also isn’t happening in isolation — it lands amid a broader contraction across the industry, with EA reportedly preparing fresh layoffs after closing its $55 billion take-private acquisition, Ubisoft shutting its Winnipeg and Belgrade studios this summer, and industry-wide job losses since 2022 now estimated at around 45,000. Xbox’s own Arkane Lyon is separately said to be reviewing “potential strategic options,” suggesting the July restructuring may not be the last announcement of its kind this year.
For players, the practical impact is a waiting game rather than a cancellation scare — both flagship projects are still funded and still in development. But anyone who has followed how acquisitions typically reshape a studio’s priorities should treat the current calm as provisional. If you’re specifically anticipating State of Decay 3 or Ninja Theory’s next game, the studio’s new owner, once named, will matter more to that game’s final shape and platform availability than anything confirmed so far. Watch for the buyer announcement itself as the next real signal, not the funding assurances already on record.
