Rumors suggest that Xbox plans to shut down two more studios.

The past aggressive expansion strategy of Microsoft continues to take a heavy toll on the base of the creative pyramid. According to reports from portals like Kotaku and Insider Gaming, the tech giant plans to shut down Compulsion Games, a Canadian studio known for We Happy Few and currently developing the much-anticipated South of Midnight. To make things worse, recent leaks on the social network Bluesky suggest a red alert has also been raised at Arkane Lyon in France, leaving the developers of Dishonored and the upcoming Blade game in a state of sheer panic over potential layoffs.

Dismantling talented teams in the midst of producing visually appealing and promising projects highlights a complete lack of strategic direction in the gaming division, which seems to prioritize damage-control spreadsheets over its own exclusive catalog.

The behind-the-scenes crisis took on a dramatic turn after anonymous accounts from senior-level employees described an unsustainable environment of stress that had been dragging on for months. "It didn't matter who was taking over... nobody felt confident we would be alright," vented one of the developers, sharing the sense of abandonment felt within the Canadian studio's premises.

This institutional paralysis intensified significantly after Phil Spencer left the helm of the brand earlier this year. Without a guiding leadership to shield creative studios, meetings with the new management became marked by evasive answers and unsettling silences. Another employee highlighted the negligent stance of the top executives: “nothing definitive was said [about Compulsion being in trouble], but nothing was communicated to assure us that things were okay.”

Currently, the local leadership of the Canadian developer is trying to engage in direct negotiations with Microsoft to find a friendly solution that avoids the mass layoff of the entire team, although the financial terms of these discussions remain confidential.

Handling renowned studios with unique artistic identities as disposable pieces of a corporate portfolio is one of the most harmful stances the Xbox leadership could take at this time. This constant looming threat of cutting subsidiaries not only damages the mental health of the professionals but also shatters any shred of credibility the brand still held with the consumer audience. While the publisher refuses to issue a definitive official stance to curb the rumors, the industry watches helplessly as another chapter unfolds in the decline of a brand that chose to devour the market rather than manage it effectively.