Two of Microsoft's most senior managers overseeing Xbox Game Studios are departing the business, it's been reported.

Head of Xbox Game Studios Craig Duncan and chief of staff Louise O'Connor are leaving Xbox after decades at the firm. Both previously served long tenures at celebrated British studio Rare, which Duncan headed up for more than 10 years.

The departures were first reported today by The Game Business. No reason was given for their joint exit, though it comes at a time of intense concern for the future of Xbox Game Studios and its many staff members — after a dire warning from new Xbox boss Asha Sharma over the division's slim profit margin.

Sharma's comments have been taken by many as a public warning that job losses are imminent, and indeed, a Bloomberg report signalled that layoffs would happen as soon as next month.

Fans are particularly concerned over the fate of several smaller teams that have not shipped a hit game in years, such as South of Midnight developer Compulsion Games, Kiln and Keeper maker Double Fine, and the already-downsized Turn 10 Studios.

Duncan joined Rare in 2011, and led the company through its period where it was best known for Kinect Sports, to launch the hugely-successful Sea of Thieves.

O'Connor, meanwhile, previously headed up the now-cancelled fantasy RPG project Everwild at Rare, following decades of service that began back in 1999 as an animator on potty-mouthed N64 adventure Conker's Bad Fur Day.

"When I stepped into the role of leading XGS 20 months ago, my purpose was to serve our studios, our teams, and the people making our games," Duncan wrote in an email announcing his departure, published by The Game Business. "Together, we set out to deliver high-quality games, strengthen the cultural fabric across our studios, and help shape the future of the business. I’m proud to say we delivered many flawless launches that drove business success for the company.

"Louise has been a thoughtful, creative, and trusted partner who has consistently championed the craft and supported our studios with clarity and care. I'm grateful for everything she's brought to XGS, and I'm sure she'll be successful in whatever comes next for her."

Without Duncan and O'Connor, Xbox Game Studios leaders will now report directly into Xbox chief content officer Matt Booty for the time being.

Last week, video game analysts told IGN that studio shutdowns and ad-funded Xbox Game Pass subscriptions were likely as Sharma now attempts to improve the Xbox division's balance sheet. "The studios most exposed are brilliant for prestige and rotten for the spreadsheet," one analyst said.

Photo by Christian Petersen/Getty Images.

Tom Phillips is IGN's News Editor. You can reach Tom at tom_phillips@ign.com or find him on Bluesky @tomphillipseg.bsky.social