Xbox has lost five studios – so who is left to make new video games?

Xbox is shedding five studios in the midst of the current layoffs, but who is left, what are they working on, and what future do they have?

As was widely expected and constantly rumoured, Microsoft has enacted another catastrophic wave of layoffs across its Xbox division, cutting roughly 3,200 staff members.

While no studios have been shut down, five of them are completely divesting themselves from Xbox and are either going independent again or getting bought out by someone else.

Everyone jokes about Sony and its PlayStation 5 having no games, but after having laid off over 9,000 people in just three years and releasing/shutting down multiple studios, Xbox is running out of people to make its games.

Xbox boss Asha Sharma has strongly implied that she wants to refocus the business on core franchises, adding that the goal is to reach a daily audience of over a billion people through Xbox services, which seems borderline delusional given the current state of the business.

So, let’s refresh our memories on which studios still remain at Xbox and Microsoft, what they’re currently working on, and what their future prospects are in Sharma’s big reset plan.

The Coalition

The Coalition was founded in 2010 by Microsoft, although it went through a few name changes and only began to garner notoriety when it took over the Gears Of War series in 2015.

Gears Of War has been its bread and butter ever since, with its next project being prequel game Gears Of War: E-Day, which launches this October. Xbox clearly wants to reposition Gears Of War as a key franchise, so The Coalition’s focus is unlikely to change.

The only problem with that is that Gears Of War hasn’t been a big seller since the Xbox 360 days and E-Day is rumoured to have an extremely high budget – which it’s very unlikely to recoup as an Xbox console exclusive.

That exclusivity decision may have been taken in part because last year’s remaster of the original game didn’t sell that well on PlayStation 5, which means the franchise has to rely even more on the nostalgia of Xbox owners.

Halo Studios

Halo Studios (formerly 343 Industries) has worked on nothing but Halo games since its founding in 2007 and that’s unlikely to ever change since Xbox is eager to re-establish Halo’s status as a core franchise, after years in the wilderness.

This refresh kicks off with Halo: Campaign Evolved later this month, a remake of the story campaign, but not the multiplayer, of the original game. Unlike E-Day, it will be released on PlayStation 5 and so far the pre-order numbers are good – no doubt helped by PlayStation owners curious about what used to be the Xbox’s killer app.

Halo Studios has already said it has multiple projects in development, though given how Xbox is acting at the moment (even reportedly pulling a Halo trailer from Sony’s last showcase), it wouldn’t be surprising if those wind up being exclusives, in some short-sighted bid to get new Halo fans on PlayStation 5 to invest in Xbox hardware.

It’s also been rumoured that the recent layoffs were partially motivated to reallocate resources to Halo, which could mean other Xbox studios will be pulled in to help support future Halo games, taking time and resources away from their own projects.

inXile Entertainment

inXile Entertainment was acquired by Microsoft in 2018 and it’s still yet to release an Xbox published game. That will finally change with Clockwork Revolution, an original action role-playing game scheduled for 2027.

The studio’s been around since 2002 and specialises in role-playing games. The likes of Torment: Tides Of Numenera and Wasteland 3 were good games and hopefully Clockwork Revolution will be too.

However, Xbox has decided the game will be an Xbox console exclusive and, not to be mean, but Clockwork Revolution is not the kind of game that’s likely to shift much hardware.

inXile’s games aren’t exactly household names, nor have they been blockbuster hits, so Xbox is only further kneecapping its chances by not releasing it on PlayStation 5.

Unless Clockwork Revolution defies those odds, Xbox’s reset strategy could see it leveraging inXile’s expertise to instead helm a new Fallout spin-off (the Wasteland games were the progenitor of Fallout) or just assist Bethesda on Fallout 5 (and maybe even Fallout 76) as a support studio.

Obsidian Entertainment

Obsidian has actually had a decent turnout of new games since it was bought by Microsoft in 2018, although they’ve not necessarily been used in the most logical way.

The Outer Worlds was a decent enough hit at four million sales, but The Outer Worlds 2 and fantasy game Avowed (both of which launched last year) were considered sales failures.

Fortunately, Grounded 2’s early access launch was more successful, but Obsidian still lost about a quarter of its staff in the recent layoffs, which is bound to impact all those projects it’s rumoured to be working on.

So far, Obsidian has ruled out another Outer Worlds sequel and hinted at further Avowed games, but those plans could very easily change under Xbox’s new strategy. We can’t imagine the newly reset Xbox is keen to spend resources on an Avowed sequel (even though rumours suggest it’s quite far into development) and it’s certainly not going to want Obsidian dedicating resources to smaller games like Pentiment anymore.

In an ideal world, Obsidian would have been tasked with a Fallout: New Vegas remaster or sequel years ago, considering it’d be such an easy win from a PR standpoint. But we could just as easily see Obsidian being delegated to second fiddle and doing support work on Fallout 5.

Playground Games

British studio Playground Games is now the jewel in Microsoft’s first party crown, with the Forza Horizon sub-series currently being the most popular franchise published by Xbox, eclipsing Halo and Gears Of War.

Forza Horizon 6 was enough of a hit to bump Xbox console sales and it’s only going to make more money once the PlayStation 5 port (that Microsoft has so far barely acknowledged and still hasn’t given a date to) comes out this year.

Playground is sure to keep supporting Forza Horizon 6 in the coming years before moving onto Forza Horizon 7, although it’s also chartering new territory with next year’s Fable reboot – the studio’s first non-racing game.

Depending on how successful that is, Playground could start doing double duty on Forza and Fable. Even if Fable underperforms (Microsoft clearly thinks the franchise is more popular than it is and may have unrealistic expectations for it), Playground is unlikely to be going anywhere and there’s been no reports of them losing staff in the current layoffs.

Rare

Rare has been part of Xbox since 2002 and while it has found long term success with live service game Sea Of Thieves, it has come at the cost of being allowed to make anything else.

Since Sea Of Thieves, it’s only assisted on a Battletoads reboot and its wholly original Everwild project was cancelled, apparently along with a supposed Banjo-Kazooie revival although that was never officially announced.

Anyone still praying for a return to Banjo-Kazooie should prepare themselves for disappointment as Xbox is now only interested in mega hits and there’s not enough nostalgia in the world to get a Banjo-Kazooie game selling tens of millions of copies.

At this stage, Rare will probably remain entirely focused on Sea Of Thieves, although what comes after is hard to predict. Maybe just Sea Of Thieves 2?

Turn 10 Studios

We wouldn’t blame you for thinking Turn 10 Studios had been shut down, considering it was badly affected by last year’s layoffs, when it lost half of its staff.

While this effectively killed its Forza Motorsport series (which was a more grounded racing sim compared to the arcade-esque Forza Horizon), Turn 10 does persist but only as a support studio for Forza Horizon, where it’ll no doubt remain.

World’s Edge

World’s Edge is perhaps the most easily overlooked Xbox studio as it’s very small and only focuses on the Age Of Empires series of real-time strategy games.

There’s been no mention of it being impacted by the recent layoffs and it’s been pumping out new expansions for Age Of Empires 4 and other entries for the last several years with seemingly little issue.

So, unless the studio or Xbox says otherwise, business appears to be carrying on as normal.

Mojang

As the developer behind Minecraft, one of Microsoft’s most consistent money makers, Mojang shouldn’t have to worry too much about Xbox execs needling them to change course.

That said, the studio does have to report directly to Sharma now. Given Minecraft’s importance and the implication that predecessor Phil Spencer’s hands-off approach hasn’t worked, Sharma may be a regular presence looming over Mojang’s shoulder.

As for other games, it’s still working on Minecraft Dungeons 2 (out this September) as well collaborating with Candy Crush studio King on mobile game Minecraft Blast, which saw a soft launch in certain countries last year.

ZeniMax Media/Bethesda

While it was presumed that Bethesda will shift attention to just The Elder Scrolls and Fallout, in light of the changes at Xbox, it has been reported that new Quake, Doom, and Wolfenstein games are still being planned.

IGN also reports that Bethesda boss Jill Braff has told employees that ‘we are shifting from a planning model primarily centred on what’s next for each independent studio to one that focuses on our strongest franchises…’

As it stands, The Elder Scrolls 6 and Fallout 5 are the only certainties, with Microsoft likely to force other studios to help Bethesda out and get the games – and perhaps new spin-offs – out the door sooner rather than later.

Swedish studio MachineGames is said to be working on a Wolfenstein 3 (and maybe a new Quake?) to coincide with a TV show. We wouldn’t rule out a sequel to 2024’s Indiana Jones game either.

id Software has been badly hit by the layoffs, so you can only hope the rumours of more Doom are true and that they’re not going to be reduced to a support studio. ZeniMax Online Studios have also lost a lot of staff this week, but MMO The Elder Scrolls Online will continue.

Although Microsoft has not confirmed anything yet, due to French labour laws, Arkane Lyon seems as if it will be leaving Microsoft, although whether they’ll be sold off or allowed to go independent is unknown – the fate of their new Blade game is also up in the air.

Activision Blizzard King

The buyout of Activision Blizzard may very well have been the most short-sighted thing Microsoft has ever done, as the move towards multiformat and constant layoffs are a direct result of spending $75.4 billion on the Call Of Duty company.

There’s nothing to suggest, though, that things won’t continue as planned at Activision or Blizzard Entertainment. Activision and its subsidiaries will keep pumping out Call Of Duty games, though the series does need to win back fans after the unpopular Black Ops 7.

Activision has already promised no more back-to-back Modern Warfare or Black Ops sequels and Microsoft has recognised that day one Game Pass releases for Call Of Duty games have done more harm than good and put a stop to them.

This year’s Modern Warfare 4 is arriving too soon to represent a major change of direction for the series, so we won’t see what sort of impact Black Ops 7’s failings will have on Call Of Duty until at least 2027’s game.

Activision’s other franchises were gathering dust to begin with and though Toys For Bob (which split from Activision but maintains a working partnership) has expressed enthusiasm for continuing the Spyro series after the new game – A Realm Beyond – in 2027, we doubt Microsoft will share that enthusiasm unless A Realm Beyond exceeds expectations.

Blizzard, meanwhile, has no new games scheduled and only continues to support Overwatch and Diablo 4. There was chatter last year of a new Overwatch mobile game and a new StarCraft action game, but both were claimed to be coming as part of a partnership with South Korean studio Nexon.

As for King, its Candy Crush games are the only real foothold Microsoft has in the mobile market, so that will remain its priority, although it’ll no doubt be under mounting pressure to further improve revenue. Especially since, like Mojang, it now reports directly to Sharma.

Last year’s layoffs also saw King staff being replaced by AI tools that they helped make, which could be awful foreshadowing for the rest of Xbox’s studios.

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