Xbox Needs New IP to Survive, Says CEO Despite Axing Key Studios

Amid an aggressive corporate “reset” that has resulted in at least 1,600 layoffs and the divestment of multiple studios, Xbox CEO Asha Sharma recently emphasized in internal communications that the gaming division “cannot survive” without fresh intellectual properties. While this philosophy sounds encouraging on paper, it rings distinctly hollow given how systematically Xbox has dismantled the very creative teams responsible for its most compelling new franchises.

Sharma delivered these remarks during an Xbox town hall, according to unauthorized transcripts obtained by Windows Central.

“Regarding content, I believe this is likely the area you are all noticing the most as we implement significant shifts,” Sharma reportedly stated. “We are supporting our strongest franchises. I want our premier games to evolve into major global properties worth billions.” As part of these sweeping operational changes, Xbox is clearly consolidating around proven blockbuster hits. The company is transitioning the oversight of the Halo franchise to Activision—the publisher behind Call of Duty, known for an extensive track record of frequent releases—while Obsidian Entertainment has been shifted under Bethesda’s umbrella to develop a brand-new Fallout title.

However, the executive’s subsequent remarks sit uneasily alongside the corporation’s actual trajectory.

“I would also like to see us continue to forge enduring new intellectual property. We will not survive if we simply recycle the past. We must cultivate the courage and creativity to invent original properties that engage entirely new audiences.” While this sentiment is accurate—no publisher can sustain itself indefinitely on nostalgia—it feels intensely contradictory coming on the heels of severed relationships with creative powerhouses like Double Fine, Ninja Theory, Compulsion Games, and Undead Labs, all of which previously delivered unique properties for Microsoft. Funding for all four studios was abruptly halted, forcing three of them to orchestrate management buyouts merely to prevent total closure, while Ninja Theory faces an uncertain future.

What original intellectual properties did Microsoft’s studios create before being dropped?

Double Fine has long been celebrated for unconventional concepts, recently releasing both Kiln, an innovative multiplayer action game built around pottery mechanics, and Keeper, where players pilot a sentient lighthouse. Ninja Theory gave players the acclaimed Hellblade series, while Undead Labs spearheaded the beloved State of Decay. Compulsion Games delivered one of Microsoft’s most visually striking recent titles, South of Midnight, a whimsical action-adventure steeped in the folklore of the American South and inspired by stop-motion aesthetics. Meanwhile, Arkane Studios—currently engaged in negotiations regarding its long-term future with Microsoft—previously gifted Xbox the mind-bending Deathloop and remains tasked with upcoming projects like Marvel’s Blade.

The outlook is hardly brighter for the studios that managed to escape outright closure. By absorbing developers like Obsidian into Bethesda’s corporate structure, the writing is on the wall: Obsidian will likely be pulled away from inventive passion projects like Pentiment to focus indefinitely on mainstream continuations of Fallout and The Elder Scrolls. Furthermore, reports indicate that id Software’s workforce has been reduced by half, making future entries in the Doom series a daunting endeavor.

Ultimately, Sharma’s optimistic rhetoric clashes sharply with corporate realities. Even if her vision of “new IP” refers strictly to lucrative, multiplatform live-service games designed to snare millions of users, her declarations sound profoundly contradictory against the backdrop of Microsoft’s recent actions.

A wave of continuous layoffs and corporate consolidation has fundamentally transformed the identity of Xbox.

Source: Polygon