Microsoft is spinning off four of its Xbox game studios as part of a major restructuring program. Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs are all set to transition away from Microsoft's direct ownership. However, in a move that has surprised many in the industry, both Compulsion and Double Fine will be allowed to retain the rights to their intellectual property (IP) and games catalogs as they return to being independent studios.
According to a memo from Xbox CEO Asha Sharma, the two studios will transition back to independent management with their portfolios, catalogs, and sufficient financial runway to develop their next projects. Compulsion Games, known for titles like Contrast and We Happy Few, will keep the rights to those games as well as their upcoming release, South of Midnight. In a public statement, Compulsion expressed gratitude for their time with Xbox and stated their commitment to continuing to create unique, story-driven games.
Similarly, Double Fine Productions—the studio behind Psychonauts, Keeper, and Kiln—is reclaiming its independence after seven years under the Xbox umbrella. Tim Schafer, the studio's founder, thanked Xbox for working toward an outcome that preserves the studio's history and returns ownership of their games to them.
The other two studios involved in the spinoff, Ninja Theory and Undead Labs, are taking a different path. They have agreed to terms to join new, unspecified ownership groups. This transition will provide them with the funding required to complete and expand their next announced games, Senua and State of Decay 3.
Meanwhile, the future of Arkane Studios, which is currently developing a game based on Marvel's Blade, remains uncertain. Microsoft management is reportedly starting consultations with the studio’s Works Council to evaluate potential strategic options.