Xbox shuts down AAA studio as major sequel killed ahead of 2027 launch

Xbox has shut down one of its more prominent video game studios, Ninja Theory, the developer behind Hellblade: Senua’s Sacrifice and Senua’s Saga: Hellblade II, while cancelling its new Hellblade sequel ahead of its planned 2027 launch.

Before Microsoft acquired Ninja Theory in 2018, the studio developed titles including Heavenly Sword, Enslaved: Odyssey to the West, DmC: Devil May Cry and Hellblade: Senua’s Sacrifice.

Under Microsoft, Ninja Theory became a first-party AAA studio and released Senua’s Saga: Hellblade II in 2024. A third entry, Senua, was in development for 2027, but mass redundancies and wider Xbox restructuring cast doubt over the studio’s future.

Microsoft confirms Ninja Theory studio closure

The news of Ninja Theory closing was confirmed on the Xbox Wire, in an article titled “Continuing Our Reset”, published by Executive Vice President and Chief Content Officer at Microsoft Gaming, Matt Booty.

“In August, Compulsion and Double Fine returned to management with their IP, back catalogs, and runway funding. Undead Labs has now successfully transitioned on similar terms and, with a new publisher, will release State of Decay 3 day one on Game Pass,” reads part of the statement.

“Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward.”

In a tweet from The Game Awards, Summer Game Fest and Gamescom ONL host Geoff Keighley claimed: “A buyer for Ninja Theory has fallen through and Xbox will now close Ninja Theory.”

There has also been a major shake-up that sees Call of Duty developers getting involved with the Halo series.

Halo 4 concept art, Xbox Game Studios

Halo Studios restructured as Arkane could face Ninja Theory’s fate

Confirming recent speculation that Activision could get involved in the development of the Halo series, including the unannounced Halo 7, Matt Booty also confirmed that Halo Studios will receive a helping hand from the Call of Duty developers to help shape the future of Master Chief and co.

Activision will also be absorbed into industry veteran studios Rare and Age of Empires studio World’s Edge.

Fallout: New Vegas and Avowed studio, Obsidian Entertainment, will be absorbed by Bethesda Game Studios. However, it’s been reconfirmed that a new Fallout remains underway, with the Fallout 3 and Fallout: New Vegas remasters currently in development, along with Fallout 5.

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Dishonored and Deathloop studio Arkane's future remains in doubt, while a new buyer for the team is sought. Otherwise, the studio could share the same fate as Ninja Theory. “Consultation with Arkane remains underway and is expected to continue through the end of the year,” said Booty.

Playground Games and Turn 10 Studio will now become one, meaning that the Forza Motorsport and Forza Horizon series will all be developed under the same roof. The same goes for the upcoming Fable reboot releasing in February 2027.

Mobile game specialists King “will expand its remit to include Microsoft Casual Games, uniting our two global leaders in casual game design and live operations.”

If we receive further developers on these stories, we’ll be sure to keep you updated on GAMINGbible.