Microsoft’s gaming division is entering another tense stretch, with Xbox Game Studios leadership changes, possible studio spin-offs, and fresh layoff concerns all landing within the same reset narrative.
Update: Mark Gordon exits Treyarch leadership
The list of Xbox-adjacent leadership changes has expanded, with Mark Gordon stepping down from his role as Studio Head at Treyarch as he retires.
Gordon, widely associated with the rise of the Black Ops series, spent 22 years at Treyarch. Kevin Hendrickson and Yale Miller are set to replace him through internal appointments.
Less than a week after new Xbox CEO Asha Sharma suggested that Xbox’s future would involve major changes, the first signs of that reset are becoming visible across Microsoft’s gaming organization.
Craig Duncan, the head of Xbox Game Studios, is leaving Microsoft. Duncan previously led Rare from 2011 until November 2024 before moving into the broader Xbox Game Studios role. His departure arrives before he has even completed two full years leading the portfolio, according to reporting from The Game Business.
In an email to staff, Duncan said his goal in the role was to support Xbox studios, strengthen culture across teams, and help shape the future of the business. He also pointed to successful game launches during his tenure as a sign that the group had delivered for Microsoft.
Duncan is not the only senior figure leaving. Louise O’Connor, Xbox Game Studios’ chief of staff, is also stepping down. Duncan described O’Connor as a trusted creative partner who helped support studios with clarity and care.
The timing makes the departures feel larger than standard executive turnover. Xbox was already expected to face a summer of restructuring, and these moves suggest the wider shake-up has started.
Xbox ownership rumors add pressure to Microsoft’s reset
The leadership changes also arrive while reports continue to suggest that Microsoft could rethink how the Xbox business is structured. If that happens, the brand’s future could look meaningfully different from the traditional console-first model players know.
Compulsion Games and Arkane Lyon face renewed uncertainty
A major part of Phil Spencer’s Xbox era was the aggressive acquisition of studios. That buying spree brought developers like Compulsion Games and Arkane under Microsoft’s first-party umbrella, promising a deeper pipeline of distinctive Xbox games.
Compulsion Games is best known for South of Midnight and We Happy Few, while Arkane’s history includes Dishonored and Deathloop. At the time of those acquisitions, Microsoft’s pitch centered on empowering creative teams to build premium exclusives. Now, as Xbox reviews its costs and priorities, those same studios are part of the conversation around possible closures, restructuring, or independence.
Insider Gaming’s Mike Straw reported that sources around Compulsion did not receive reassurance when concerns were raised internally. Kotaku later reported that Compulsion was in negotiations with Microsoft, though the exact outcome of those talks remains unclear.
Update: Compulsion’s status reportedly clarified internally
Bloomberg’s Jason Schreier later commented on ResetEra that employees at Compulsion had been told what was happening. The broader uncertainty around Xbox’s studio strategy, however, remains part of the story.
Arkane’s situation is also under scrutiny. Arkane Austin was already closed after Redfall, while Arkane Lyon has been working on Marvel’s Blade, a project that has remained mostly quiet since its 2023 reveal. According to the report, employees have expressed real concern about what comes next.
Update: spin-off talks reportedly include multiple Xbox studios
Schreier later reported that Compulsion, Double Fine, and Ninja Theory were in active negotiations to separate from Microsoft and operate independently as a way to avoid outright closures.
Those discussions could still lead to studios buying themselves back from Xbox, although any independence path may also come with job losses.
Gears of War: E-Day keeps Xbox in the exclusives conversation
At the same time, Xbox is still trying to remind players that it has major first-party games on the way. Gears of War: E-Day is not currently planned for PlayStation 5, keeping it positioned as one of Xbox’s clearest exclusive bets.
Xbox layoffs would follow another major Microsoft cut
The potential for more Xbox layoffs feels familiar because Microsoft already cut roughly 4% of its workforce last year, with many of those reductions touching the Xbox division.
The games industry is still being shaped by layoffs, cancelled projects, and studio closures. Rare’s Everwild, the Perfect Dark reboot, and an unannounced ZeniMax MMORPG were among the projects affected by Microsoft’s previous round of cuts.
Microsoft’s message is still about prioritization
Phil Spencer previously framed the company’s difficult choices as part of a strategy to prioritize the strongest opportunities and protect Xbox’s long-term roadmap.
Less than a year later, Xbox appears to be making another round of hard calls. For players, the question is what those decisions mean for the studios behind Xbox’s most creative projects. For developers, the more immediate question is whether those choices will cost more people their jobs.
This remains a developing story as Microsoft’s Xbox reset continues.
Xbox’s cloud gaming focus is still a concern
Even after a strong showcase, Xbox leadership continues to emphasize cloud gaming. That strategy may help the brand expand beyond hardware, but it also risks raising the same concerns that surrounded Stadia: players still want clear commitments to consoles, studios, and games they can trust will actually ship.
Source context: DualShockers reporting by Jake Valentine, originally published June 15, 2026. This Koigen version has been rewritten for original wording and SEO clarity.