It appears as though Xbox's recent financial troubles, which are expected to result in layoffs in July, may also result in studio closures, with Insider Gaming's Mike Straw reporting on Bluesky that Arkane Lyon (responsible for Deathloop, Dishonored, and the ongoing development of Marvel's Blade) and Compulsion Games (of Contrast, We Happy Few, and South of Midnight) may be facing potential closure in the coming months. This is according to sources inside those game studios, who say that internal communications and overheard conversations at Xbox Game Studios have them "scared" for the future of their studios.

Insiders are reporting that even game studios that had previously been insulated from potential layoffs and closures may be facing just that eventuality. A report by Bloomberg's Jason Schreier, corroborates these reports, stating that Double Fine Productions, Compulsion Games, and Ninja Theory—the latter, responsible for the Hellblade series, was informed of the closure in a call on June 15—are all in negotiations with Microsoft to reach a separation deal that would see the game studios become independent or be bought out in order to avoid closure. Insiders say that even successful buyout deals are likely to result in significant layoffs. Allegedly, some employees have already been informed of the financial instability and advised to proactively seek employment.