Matt Booty's Xbox memo turns the Ninja Theory sale into a proposed closure
The news came in an internal memo from Xbox chief content officer Matt Booty, which Xbox Wire published on September 22 under the title "Continuing Our Reset." The key passage is short: "Unfortunately, two separate agreements for Ninja Theory fell through," he said, adding that Xbox will begin consultation with staff on a proposed closure. Kotaku, GameDaily, Pure Xbox and others reported the memo within hours. None of them added details beyond Microsoft's text.
In July, Microsoft had said Ninja Theory would leave Xbox, not close. Techtroduce put it this way: the Cambridge-based developer had been expected to leave Microsoft rather than shut down, and in July Xbox announced that Ninja Theory had entered terms to move to new ownership with funding intended to support development of Senua. The September memo is the first time Microsoft has said those terms failed.
The memo does not say who the buyers were, why the deals fell apart, or what "other paths forward" could mean. It is an internal message to employees, not a detailed announcement, so readers should treat the studio's status as undecided.
One detail in the widely syndicated PlayStation LifeStyle version, which ran on AOL, needs correcting. That report dated the restructuring to June. The layoffs and studio exits were actually announced on July 6, 2026. June 7 was the Xbox Games Showcase, where Microsoft revealed Senua. The same report said the studio had "150+ employees." In a June Xbox Wire interview, studio head Dom Matthews spoke of "all 85 creatives" working on Senua. The two figures may count different groups of staff, and no other outlet has confirmed the higher number.
Four studio exits, four different outcomes in the Xbox reset
The Ninja Theory news only makes sense next to what happened to the other studios. On July 6, Xbox CEO Asha Sharma announced what she called "the most significant restructure in XBOX history." The plan cut about 3,200 jobs across fiscal year 2027, including about 1,600 that day, and sent four studios out of Xbox to new management. She said Compulsion Games and Double Fine Productions would return to their management teams as independent studios, keeping their IP and catalogs. Ninja Theory and Undead Labs had "entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3."
Booty's September memo reports how each of those four exits went:
| Studio | July 6 plan | Status as of September 22, 2026 |
|---|---|---|
| Compulsion Games | Return to management as independent studio | Completed in August, with IP, back catalog and runway funding |
| Double Fine Productions | Return to management as independent studio | Completed in August, on the same terms |
| Undead Labs | Join new ownership with funding for State of Decay 3 | Transitioned; State of Decay 3 ships day one on Game Pass with a new publisher |
| Ninja Theory | Join new ownership with funding for Senua | Two agreements fell through; consultation on proposed closure |
Arkane is a separate case. It was not on the July divestiture list. Instead, Arkane's French management began a required consultation with its Works Council to review "potential strategic options." Booty said that consultation "remains underway and is expected to continue through the end of the year." Kotaku notes that Arkane, which was hard at work on a Marvel Blade game, is also currently facing a potential closure.
The table shows that Microsoft's reset is several different deals, each depending on whether a buyer or management team could take over. Three of the four planned exits went through. Ninja Theory is the only one where Microsoft could not complete a sale.
Why Microsoft wanted Ninja Theory off the books
Sharma's July memo explains the financial pressure. It is the best official account of why a respected studio was put up for sale at all. She told staff the Xbox business "is not healthy," with margins "3-10x lower than comparable platform and publishing businesses." She said Game Pass, multi-platform publishing and a broader content portfolio "did not grow at the pace we expected." She also wrote that "in a typical year, we lost 64 cents for every dollar we invested," and that Xbox is "not the best home for every type of studio."
The July memo also promised that "none of our first party publicly announced games or projects are being cancelled as part of these reductions." Senua was covered by that promise. It was publicly announced and would have been funded by the incoming owner. The September memo says nothing about whether the promise still holds now that the sale has failed.
PlayStation LifeStyle said "poor sales seem to have made the company a liability." Microsoft has not said that about Ninja Theory. The only official commercial reasoning is Sharma's company-wide comments on margins and returns, which do not name any studio.
Senua was built as a studio-defining game, and its 2027 date is now at risk
The June 7 Xbox Wire interview shows what depends on this. Matthews said Ninja Theory released Senua's Saga: Hellblade II in May 2024 and had started work on Senua by September 2024. He said it was the first time in more than 12 years, since DmC: Devil May Cry, that the whole team had worked on one project. He also confirmed he had stopped work on Project Mara, a horror game the studio had announced earlier, so all 85 creatives could work on Senua.
Matthews described Senua as a move away from the earlier Hellblade games' pacing and toward "an out-and-out action-adventure game." It splits play fairly evenly between combat, traversal and puzzles. The map is about twice the size of Hellblade II's, though he said it is still a linear story and not an open world. Those plans explain why the game needs a full, experienced team to finish.
The platform list is the part most relevant to Windows players. According to Xbox Wire, Senua was due in 2027 on Xbox Series X|S, Xbox on PC and cloud, included with Game Pass, and as an Xbox Play Anywhere title. Play Anywhere means one purchase covers both console and PC. It was also listed for Steam and PlayStation 5, so it was never a console exclusive.
As of September 22, Microsoft has neither cancelled Senua nor promised it will ship. GameDaily reports that Microsoft has not issued a formal cancellation notice for Senua, but with its developer heading toward closure, the game's future is genuinely open. Softonic lists the possibilities: if no deal comes together, the project could be pushed back, absorbed into Xbox internally, or canceled outright. Those are reasonable guesses, not things Microsoft has announced. The only official statement is the line about "other paths forward."
The Senua showcase reveal looks different after the Ninja Theory deals collapsed
Many readers have asked why Microsoft showed Senua in June only to put its studio up for sale, and then possibly close it. Kotaku reports that a source at Microsoft told Game File that the goal was to help promote the brand ahead of finding Ninja Theory a potential buyer. Other outlets have repeated that explanation, but it comes from that one Game File source. Microsoft has not confirmed it.
If the account is accurate, the timeline follows. Xbox showed Senua on June 7 to raise the studio's value. It announced the planned sale on July 6. It admitted on September 22 that the sale had failed. Microsoft has not given a reason for the failure.
What the Ninja Theory consultation process does and does not decide
AOL's report says the consultation is "required by law." Microsoft's memo does not use that phrase for Ninja Theory. For Arkane in France, the July memo does call the Works Council process "required consultation." Ninja Theory is based in Cambridge, England, where employers generally have to consult staff before large redundancies. That point is general background. Microsoft has not said which rules apply to Ninja Theory, how long the process will take, or when it expects a decision.
A consultation is a period in which the employer discusses a proposal with affected staff before deciding. Booty's wording keeps two options open during that time: consulting on closure "while continuing to explore other paths forward." A buyer, a management buyout like Compulsion's and Double Fine's, or another arrangement could still come through. Microsoft has named none of these, so none is on the table publicly.
Ninja Theory's closure talks sit inside a wider Xbox studio reorganization
The Ninja Theory news was part of a larger announcement. The same memo cut 268 roles across Halo Studios, other first-party studios, and Xbox Game Studios management and central teams. Booty wrote that the cuts since July, including the studio exits, bring Xbox "roughly three-quarters of the way through previously announced restructuring." PlayStation LifeStyle turned that into "a remaining 800 jobs." That number is simple arithmetic: a quarter of 3,200 is 800. Microsoft did not give a remaining total.
The memo also moved several studios under new groups. Activision takes on World's Edge and Rare, and will develop the next Halo game with a new team kept separate from Call of Duty. A small Halo Studios team stays to support the games already on sale. Bethesda takes on Obsidian, including Grounded and a new Fallout project with Bethesda Game Studios. King absorbs Microsoft Casual Games. Playground and Turn 10 merge into one studio focused on Forza and Fable. The theme across all of it is fewer business units. A studio that no longer fits one of the big publishing groups has to be sold or it risks closure.
What this means for you
For most players and Game Pass subscribers, there is nothing to do yet. Nothing about Senua can be bought or downloaded, and Microsoft has neither cancelled it nor confirmed a new home for it. The people with a real decision in front of them are Ninja Theory's staff, anyone thinking of buying the studio, and anyone planning around a 2027 release.
- Ninja Theory has not closed. As of September 22, 2026, Microsoft is consulting employees on a proposed closure and says it is still exploring alternatives.
- Senua is still listed for 2027 on Xbox Series X|S, Xbox on PC, cloud, Game Pass, Steam and PlayStation 5. Microsoft has not said it will ship if the studio closes.
- Undead Labs' State of Decay 3 is on firmer ground: Microsoft says it will launch day one on Game Pass with a new publisher.
- The July promise that no announced first-party games would be cancelled was made before Ninja Theory's sale fell through, so don't treat it as a guarantee for Senua.
- Arkane's future is also unsettled, with its consultation expected to run through the end of 2026.
- Booty has scheduled an all-Xbox town hall for October 6, 2026, the next date when an update is likely, though he has not promised news about Ninja Theory then.
Three of Microsoft's four planned studio exits went through. Ninja Theory, the one studio with a big new game just shown at the Xbox Games Showcase, is the one Microsoft could not sell. That makes Senua the clearest test of the July promise not to cancel announced games. Booty says he will spend the next week with Xbox studios before the October 6 town hall. Until Microsoft names a buyer, a buyout or a final decision, any 2027 plans for Ninja Theory or Senua rest on a studio that may close.