Xbox Faces Challenges With Studio Shutdown and Leadership Changes

WHO:

The Verge - Asha Sharma took over as head of Xbox in February 2026.

Kotaku - Craig Duncan replaced Alan Hartman as head of Xbox Game Studios in November 2024.

The Game Business - Craig Duncan, head of Xbox Game Studios, resigned after more than 18 months in the role.

The Game Business - Louise O’Connor, chief of staff for Xbox Game Studios, is also leaving the company.

[01:15 PM ET] - Kotaku - Craig Duncan has been part of the Xbox organization since 2011 and is known for running UK developer Rare for nearly 14 years.

[01:15 PM ET] - Kotaku - Louise O’Connor joined Rare in 1999 and has worked in numerous art and production roles.

The Game Business - Craig Duncan, head of Xbox Game Studios, announced his resignation after less than two years in the role.

The Game Business - Louise O’Connor, chief of staff for Xbox Game Studios, will also be leaving the company.

The Verge - Asha Sharma is the head of Xbox.

Kotaku - Craig Duncan is the head of Xbox Game Studios.

Kotaku - Louise O’Connor is the chief of staff for Xbox Game Studios.

Kotaku - Compulsion Games is the studio being shut down, known for "South of Midnight" and "We Happy Few."

WHAT:

Fast Company - Xbox is planning major job cuts in July 2026, with significant budget cuts for marketing and other areas of the business.

GamesIndustry.biz - Compulsion Games recently secured the Game of the Year Award at the Gayming Awards and Best New Intellectual Property at the BAFTA Awards 2026.

Kotaku - Compulsion Games is being shut down, with multiple individuals from the studio posting on social media looking for work.

Fast Company - Xbox is planning major job cuts in July, with significant budget cuts for marketing and other areas of the business.

[01:15 PM ET] - Kotaku - Craig Duncan oversaw studios including Halo Studios, The Coalition, and Obsidian during his tenure.

[01:15 PM ET] - Kotaku - Asha Sharma stated that Xbox has spent over $20 billion on ongoing investments in content, platform, and hardware subsidy over the past five years.

The Verge - Asha Sharma has cut the price of Xbox Game Pass and made Gears of War: E-Day and Clockwork Revolution Xbox console exclusives.

Fast Company - Xbox is planning major job cuts in July, although the scale and details of the cuts are still unclear.

Fast Company - Asha Sharma stated that Xbox will end the fiscal year at about a 3% accountability margin, down year-over-year, and that over the past five years, Xbox has spent over $20 billion on ongoing investments while annual revenue has declined nearly half a billion.

Fast Company - Sharma noted that the price for console storage components has more than doubled since last fall and is expected to increase significantly again for the 2027 holiday season.

Kotaku - Compulsion Games is described as the developer of the Peabody Award-winning title "South of Midnight."

Kotaku - Multiple individuals from Compulsion Games have posted on social media looking for work following the announcement of the studio's shutdown.

The Verge - Xbox plans to shut down Compulsion Games.

Kotaku - Approximately 90 individuals are listed as working at Compulsion Games, though the actual number is believed to be higher.

The Verge - A memo from Asha Sharma indicated an Xbox “reset” and expected layoffs.

Kotaku - Compulsion Games leadership is in negotiations with Microsoft regarding the studio's fate.

Kotaku - Mass layoffs at Xbox are expected to begin in the coming weeks.

WHERE:

Kotaku - Compulsion Games is located within the Xbox Game Studios umbrella.

WHEN:

Kotaku - Asha Sharma and Matt Booty published an open email revealing Xbox's struggles just days before the article was published.

Kotaku - The talent lead at Compulsion Games was posting job listings on LinkedIn two months prior to the article.

WHY:

Fast Company - Asha Sharma stated that Xbox's current platform infrastructure is “overly complex” and “not built for the battle ahead,” indicating a need for reassessment of investment priorities for the next five years.

Fast Company - Sharma noted that Xbox has become too reliant on vendors to operate its systems and is unable to make as many consoles as players want to buy due to a “hardware component crisis.”

[01:15 PM ET] - Fast Company - Asha Sharma described Xbox's current platform infrastructure as “overly complex” and “not built for the battle ahead,” indicating a need for reassessment of investment priorities for the next five years.

[01:15 PM ET] - Fast Company - Sharma noted that Xbox has become too reliant on vendors to operate its systems.

Fast Company - Asha Sharma described Xbox's current platform infrastructure as “overly complex” and “not built for the battle ahead,” indicating a need for reassessment of investment priorities for the next five years.

The Verge - Asha Sharma and Matt Booty stated that Xbox has “over extended” with its studio system and has not adequately funded its franchises to compete.

Kotaku - The shutdown of Compulsion Games follows reports of financial and logistical struggles within Xbox.

HOW:

Fast Company - Asha Sharma mentioned that the price for console storage components has more than doubled since last fall and is expected to increase significantly again for the 2027 holiday season.

[01:15 PM ET] - Fast Company - Asha Sharma mentioned that the price for console storage components has more than doubled since last fall and is expected to increase significantly again for the 2027 holiday season.

The Game Business - Craig Duncan stated in an email to staff that his purpose was to serve the studios and teams making games, and he expressed pride in delivering high-quality games during his tenure.

The Verge - Asha Sharma reorganized the Xbox platform team, including bringing in executives from Microsoft’s CoreAI team.

(UPDATED June 16, 2026 18:29 UTC)

Asha Sharma, who became head of Xbox in February 2026, announced plans for major job cuts and budget reductions in marketing and other areas, set to take effect in July 2026. This comes as Compulsion Games recently celebrated winning the Game of the Year Award at the Gayming Awards and Best New Intellectual Property at the BAFTA Awards 2026. Sharma also highlighted that the current platform infrastructure is overly complex and not prepared for future challenges, with the cost of console storage components having more than doubled since last fall and expected to rise further for the 2027 holiday season.

(UPDATED June 16, 2026 06:48 UTC)

In a significant shakeup at Xbox Game Studios, Craig Duncan has resigned after more than 18 months as head of the division, and chief of staff Louise O’Connor is also leaving the company. Compulsion Games is being shut down, prompting several employees to seek new job opportunities, while Xbox is preparing for major job cuts and budget reductions in July as part of a broader reassessment of its investment priorities. Asha Sharma highlighted that Xbox's platform infrastructure is overly complex and that the company is struggling to meet console demand due to a hardware component crisis, with storage component prices having more than doubled since last fall and expected to rise further for the 2027 holiday season.

(UPDATED June 16, 2026 01:49 UTC)

Craig Duncan, who has been with Xbox since 2011 and led the UK developer Rare for nearly 14 years, is stepping down from his role. Louise O’Connor, a member of Rare since 1999, has held various positions in art and production during her tenure. Asha Sharma highlighted that Xbox has invested over $20 billion in content and hardware over the past five years, but she also pointed out the need to reassess priorities due to the platform's overly complex infrastructure and reliance on vendors, especially as storage component prices are expected to rise significantly again for the 2027 holiday season.

(UPDATED June 15, 2026 23:31 UTC)

Asha Sharma has announced a price cut for Xbox Game Pass and confirmed that Gears of War: E-Day and Clockwork Revolution will be exclusive to Xbox consoles. However, Xbox is also preparing for significant job cuts in July, with details still unclear, while Sharma indicated that the company will finish the fiscal year with a 3% accountability margin, a decline from the previous year. She highlighted that the price of console storage components has more than doubled since last fall and is expected to rise again for the 2027 holiday season, emphasizing the need to reassess investment priorities for the future.

(UPDATED June 15, 2026 21:51 UTC)

Craig Duncan, the head of Xbox Game Studios, has announced his resignation after less than two years in the role, along with chief of staff Louise O’Connor, who will also be leaving the company. Meanwhile, Compulsion Games, known for the Peabody Award-winning title "South of Midnight," has shut down, prompting multiple individuals from the studio to seek new job opportunities on social media. In his farewell email to staff, Duncan expressed pride in his work serving the studios and teams that create games, highlighting the high-quality titles delivered during his tenure.

(UPDATED June 15, 2026 20:15 UTC)

In a significant move, Xbox plans to shut down Compulsion Games, the studio known for titles like "South of Midnight" and "We Happy Few," as part of a broader restructuring effort led by Asha Sharma. Approximately 90 individuals are believed to be working at Compulsion Games, and negotiations are currently underway between the studio's leadership and Microsoft regarding its future. This decision comes amid reports of financial and logistical struggles within Xbox, with mass layoffs expected to begin in the coming weeks as the company acknowledges it has "over extended" its studio system.