Xbox Game Studios

• 1. Introduction

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  Xbox Game Studios began with Bill Gates being talked out of games. In Microsoft's earliest years, the company published titles like Olympic Decathlon. Steve Ballmer reportedly urged Gates to deemphasize them, so Microsoft could professionalize its image.

  Decades later, Microsoft announced a plan to acquire Activision Blizzard in an all-cash deal valued at $68.7 billion. That deal, said Microsoft, would make it the third-largest gaming company by revenue, behind only Tencent and Sony. Somewhere between those two moments, a division based in Redmond, Washington built a portfolio of studios responsible for Halo, Minecraft, Fallout and Forza.

  The division has changed its name four times since 2000. It has absorbed and closed dozens of studios, laid off thousands of employees, and cycled through more than half a dozen division heads. What turned a corner of a software company into a publisher with dozens of studios? And why, after decades of chasing exclusive Xbox titles, is it now releasing its games on PlayStation and Nintendo consoles?

• 2. Four Names, One Division

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  In 1992, Microsoft announced Microsoft Golf for Windows, based on Access Software's Links, and grew its games division from two employees to six. Microsoft was, at the time, best known for MS-DOS and Windows, not games. By 1999 the company had acquired FASA Interactive for its MechWarrior series, along with Access Software and Aces Game Studio, the team behind Flight Simulator. It also had long-term publishing deals with Ensemble Studios, maker of Age of Empires and Age of Mythology, and with Digital Anvil, maker of Starlancer.

  Around March 2000, Microsoft split this games work into its own division, named Microsoft Games, timed with the public announcement of the first Xbox console. Robbie Bach, already a Microsoft entertainment executive, became senior vice-president, while Ed Fries was named vice-president and Shane Kim became general manager. FASA Interactive was renamed FASA Studio and Access Software became Salt Lake Games Studio, both folded into the new division. In 2001, Microsoft renamed the division again, to Microsoft Game Studios.

  By June 2011, at that year's Electronic Entertainment Expo, Microsoft had quietly renamed the division once more, to Microsoft Studios. On the 5th of February 2019, it changed names a third time, becoming Xbox Game Studios. Microsoft said the new name reflected its intent to use the Xbox brand across every device it supports.

  By its fourth name, the division was no longer just a small publishing arm within Microsoft. It had spent two decades absorbing outside studios one by one.

• 3. The Acquisition Machine

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  Bungie was in the middle of building Halo: Combat Evolved when Microsoft bought the studio in June 2000. The acquisition turned a planned PC game into an Xbox launch title, released in 2001 alongside the console itself. Turn 10 Studios was created in 2001 to build the Forza racing series. In September 2002, Microsoft bought Rare, a studio that had spent years working almost exclusively for Nintendo.

  Ed Fries and Shane Kim secured a publishing deal with Lionhead Studios for 2004's Fable, the first major role-playing game built for Xbox. In 2006, Microsoft acquired Lionhead Studios outright, along with the Fable properties, hoping to secure a sequel for the upcoming Xbox 360.

  Late in 2014, Microsoft completed its acquisition of Mojang, the Stockholm studio behind Minecraft. Founders Markus Persson, Jakob Porser and Carl Manneh all left Mojang once the deal closed. Matt Booty, the studio's corporate vice-president in 2020, said the Mojang deal became a template for later acquisitions, calling it an "unplugged studio" with limited integration into the wider Microsoft corporation.

  On the 21st of September 2020, Microsoft and ZeniMax Media announced a planned acquisition. It covered Bethesda Game Studios, Arkane Studios, id Software, MachineGames, Tango Gameworks and ZeniMax Online Studios. The deal closed on the 9th of March 2021, after US and EU regulators approved it. The total price was $8.1 billion. Bethesda Softworks stayed on as an operational unit, keeping its existing leadership in place.

  On the 18th of January 2022, that acquisition announcement came with a reorganization of Microsoft's gaming business. Xbox Game Studios, ZeniMax Media and Activision Blizzard were folded into a new Microsoft Gaming division. Phil Spencer became its CEO, with Matt Booty leading Xbox Game Studios beneath him. Regulators cleared the deal by the 13th of October 2023, and Microsoft closed it that same day. Activision Blizzard then became a subdivision of that new Gaming division.

  During litigation over that merger, internal Microsoft documents from around 2020 surfaced. They showed interest in re-acquiring Bungie, or buying Sega's game studios, Supergiant Games, Niantic, Thunderful Group, Zynga, IO Interactive, Scopely and Playrix. Also on that list was the publisher Square Enix, which Microsoft saw as a way to strengthen its position in Asia and in mobile gaming.

• 4. The Leadership Carousel

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  Peter Moore took over in 2003 as vice-president of Microsoft's Home and Entertainment Division, reporting to Robbie Bach. Moore pulled Electronic Arts onto the Xbox platform and courted Japanese developers with titles like Phantom Dust and Blinx: The Time Sweeper. He left Microsoft in July 2007 to rejoin Electronic Arts and return to the San Francisco Bay area. Don Mattrick replaced him as vice-president of the Xbox and Games Business, before leaving in July 2013 to become CEO of Zynga. Julie Larson-Green succeeded Mattrick as president of the Devices and Studios Engineering Group, overseeing both Xbox hardware and the games studios.

  Satya Nadella became Microsoft's CEO in February 2014, at a moment when the Xbox One was seen as overpriced and too focused on non-gaming features. Under Nadella, Phil Spencer was named head of Microsoft Studios, replacing Jason Holtman, who had held the job for only six months. Spencer was promoted again in September 2017, gaining the title of executive vice-president of gaming and reporting directly to Nadella. In January 2018, Matt Booty moved from running the Minecraft games business to corporate vice-president of Microsoft Studios.

  On the 26th of October 2023, Microsoft promoted Sarah Bond to president of Xbox, giving her oversight of platform, business and hardware work. Matt Booty moved up to president of Game Content and Studios, taking on responsibility for ZeniMax and Bethesda. Jamie Leder kept running ZeniMax as a limited integration entity, now reporting to Booty. Alan Hartman, previously head of Turn 10, was promoted to lead Xbox Game Studios in Booty's place.

  On the 14th of October 2024, Rare's creative lead Craig Duncan was named to succeed Hartman as head of Xbox Game Studios. Duncan took over that November, once Hartman retired after a three-decade career at Microsoft.

• 5. Layoffs and Closures

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  In 2003, Microsoft decided EA Sports was better positioned to build sports games for Xbox. It laid off about 78 employees who had been doing that work in-house. The following year, it sold its Salt Lake Games Studio, renamed Indie Games, to Take-Two Interactive, where it became Indie Built.

  In January 2009, Microsoft announced layoffs of up to 5,000 jobs across the company, as personal computer sales slowed during the Great Recession. Inside the games division, Ensemble Studios was disbanded after finishing Halo Wars in early 2009. Aces Game Studio was shut down in the same round of cuts.

  In March 2016, Microsoft canceled Lionhead's Fable Legends and Press Play's Project Knoxville, and shut both studios soon after. Around the same time, Microsoft's roster lost BigPark, Good Science Studio, Leap Experience Pioneers, Function Studios and State of the Art.

  In January 2023, Microsoft laid off 10,000 employees, about 5 percent of its global workforce. Many of them worked at 343 Industries, The Coalition and Bethesda Game Studios.

  In July 2025, Microsoft Gaming restructured ahead of its new financial year, cutting jobs at Rare, Compulsion Games, Undead Labs and Turn 10 Studios. Turn 10, the studio behind Forza Motorsport, reportedly lost almost half its workforce, according to former content coordinator Fred Russell. Microsoft was expected to turn Turn 10 into a support studio for Forza Horizon and the ForzaTech engine. Rare's Everwild stopped production entirely, and Microsoft canceled the Perfect Dark reboot, closing that game's developer, The Initiative, at the same time.

  Alongside Everwild's cancellation, Rare veteran and designer Gregg Mayles left the company after 35 years, together with producer Louise O'Connor.

• 6. Cracks in the Exclusivity Wall

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  When Microsoft acquired ZeniMax in 2021, it agreed to honor existing commitments already in place for two of the studio's games. Arkane Studios' Deathloop and Tango Gameworks' Ghostwire: Tokyo stayed contractually exclusive to PlayStation 5 for 12 months before reaching Xbox Series X and Series S.

  Xbox Game Studios also let Cuphead, made by Studio MDHR, and Ori and the Blind Forest, made by Moon Studios, come to the Nintendo Switch. It allowed Rare's Banjo-Kazooie characters to appear in Super Smash Bros. Ultimate as well. The division called these moves existing commitments to other platforms. It said it had no plans to further expand its exclusive first-party games to other consoles.

  As Microsoft promoted the Xbox Series X, it said new titles would not be exclusive to the console for its first year or two. Those games would instead run on both Xbox One and the new console, with some performance improvements on the newer hardware. That mirrored a path Sega had taken years earlier, when it also stopped making console-exclusive games.

  In November 2020, Phil Spencer said in an interview that he wanted more focus on role-playing games. He felt the genre had been underserved up to that point.

• 7. The Studios Today

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  Founded in Twycross in 1985, Rare spent years developing almost exclusively for Nintendo before Microsoft brought it in house. Today it is credited with the Battletoads, Killer Instinct, Banjo-Kazooie, Conker, Perfect Dark and Viva Pinata series, along with Sea of Thieves.

  World's Edge, the Redmond studio formed in 2019 to oversee the Age of Empires series, does not develop games directly. Instead, according to creative director Adam Isgreen, it guides outside studios like Relic Entertainment, Forgotten Empires and Tantalus Media to keep the series on track.

  On the 6th of October 2024, 343 Industries rebranded itself as Halo Studios, confirming that future Halo games would move to Unreal Engine 5. That replaced the proprietary Slipspace Engine, the technology that had powered Halo Infinite.

  In 2024, Xbox Game Studios also began releasing classic Nintendo Entertainment System, Super Nintendo Entertainment System and Nintendo 64 games through Nintendo's Switch Online service. Rare developed all of them, and some had originally been published by Nintendo itself, decades before Microsoft owned the studio.