Microsoft Moves to Shut Down Ninja Theory After Rescue Deals Collapse

Microsoft has indicated it plans to close Ninja Theory, the studio behind Hellblade, after two potential deals to save the Xbox-owned developer fell apart.

A consultation with staff at the Cambridge-based studio has begun, in line with UK employment law. While Microsoft has stated it is now working toward closing the studio, it remains open to an agreement that could rescue the company.

"Unfortunately, two separate agreements for Ninja Theory fell through," Xbox Chief Content Officer Matt Booty said in a blog post today. "We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward."

In June, during an Xbox Games Showcase event, Microsoft announced Senua, the third entry in the Hellblade series. At the time, there was little concern about the game's release. Indeed, there was little public concern, at least, about Ninja Theory itself.

But that all changed when the optimism sparked by the positive showcase was shattered by new Xbox CEO Asha Sharma's "reset" memo, which suggested mass layoffs and studio closures were coming. Confirmation arrived in July, when Ninja Theory was among the studios on the Xbox chopping block.

Amid the reports, fans expressed confusion at how Microsoft could announce Senua from Ninja Theory and then just days later tell the studio's staff it planned to shut the company down. According to Game File, Microsoft allegedly planned to close or spin off Ninja Theory when it revealed Senua, and it did so thinking that "the promise of a newly announced game would help draw investor interest in the studio."

Clearly, that plan has failed.

Will Senua ever come out? IGN has yet to comment, but it's looking increasingly unlikely unless a dramatic, 11th-hour deal can be struck that would save not just the studio, but the Hellblade franchise. Perhaps giving Ninja Theory hope is that Psychonauts developer Double Fine and South of Midnight developer Compulsion both navigated their way to independence and brought their intellectual property along with them, as well as funding for new games. Microsoft, it seems, is willing to part with IP to help get its studios out the door.

Ninja Theory's Hellblade games have struggled commercially, and Microsoft is currently doubling down on its big franchises in a bid to raise revenue and profitability. It's focusing on the likes of Minecraft, Halo (which is now under Activision's umbrella), Fallout, and The Elder Scrolls as it looks to turn around the Xbox business over the next few years.

For more on all the big changes at Xbox announced today, check out our roundup.