Microsoft Plans Major Xbox Division Cuts, Studio Closures, and Game Cancellations

Microsoft is gearing up for a major restructuring of its Xbox division, including layoffs, studio closures, and game cancellations. According to sources, the company is considering shutting down at least five studios, including the developer behind Marvel's Blade, and aims to cancel that game. The closure of Ninja Theory, creator of Hellblade, has been confirmed, and several other studios like Compulsion Games and Double Fine are in active negotiations to spin off from Microsoft.

Xbox CEO Asha Sharma and content chief Matt Booty recently warned of a "reset," stating that Microsoft had "over extended" with its studio system and that the hardware component crisis is driving up costs significantly. Microsoft has not ruled out spinning off Xbox entirely, considering options like a wholly owned subsidiary, joint venture, or even a sale.

Additionally, Microsoft is raising Xbox console prices: starting August 1, 512GB models will cost $100 more, and 1TB models $150 more. The Xbox Series S will start at $499.99, the Series X without a disc drive at $749.99, and the Series X with a disc drive at $799.99. Microsoft is also sunsetting the 2TB Xbox Series X. The company attributes the hikes to a 2.5x increase in console storage and memory prices, with expectations of another doubling by fall 2027.

Xbox is exploring "radically different" console business models for its next-generation Project Helix console, partly due to the RAM shortage. The company has also hired game industry analyst Matthew Ball as chief strategy officer.

Regarding exclusives, Microsoft has reversed its earlier move to release four games on PS5 and Switch, and fans are demanding more exclusives, backward compatibility, and free online multiplayer through the new Xbox Player Voice portal. Meanwhile, Xbox is rebranding to XBOX (all caps) based on a public poll.