The ambitious expansion of Xbox Game Studios was once promised to deliver a diverse roster of first-party titles tailored to every type of gamer. However, severe budget mismanagement, escalating internal pressure, and other difficulties led to disappointing results.

Now entering a new era under the leadership of Asha Sharma, Xbox is changing course. Now, studios no longer enjoy bottomless budgets, nor do they have free rein to pursue every passion project.

Under the new leadership, every development team must now present a compelling business case to Xbox leadership before any project receives the green light.

Asha Sharma XBOX

Brian Fargo of inXile and Clockwork Revolution Reveals Asha Sharma’s New Rules for Projects in Development

Details regarding Xbox’s internal pivot emerged in a recent Fortune report examining the future of Microsoft’s gaming brand under Asha Sharma.

Central to Sharma’s strategy is how titles are vetted, funded, and monitored. Between 2018 and mid-2026, Xbox Game Studios struggled to launch breakout titles that achieved both critical and commercial success, with Forza Horizon standing as a rare exception. While select releases earned modest acclaim, few translated that praise into sales, while others stalled critically and commercially alike.

Following a wave of studio closures and project cancellations, Sharma instituted tighter controls to stabilize the brand.

Brian Fargo, head of inXile Entertainment and supervisor of the upcoming console exclusive Clockwork Revolution, confirmed that blank-check development is officially over. Studios are now required to pitch projects that demonstrate clear commercial potential and present a return on investment.

Through these measures, Asha Sharma aims to stop runaway spending, enforce higher quality standards, and hold development teams accountable, —marking a clear departure from the hands-off approach that characterized Phil Spencer’s tenure.

Asha Sharma XBOX Game Pass

XBOX Game Studios: From Hope to Disaster

At its height following the acquisition of Activision Blizzard, Microsoft Gaming boasted an impressive portfolio of 40 studios spanning mobile, console, and PC markets.

The idea was to leverage a massive network of developers to produce a steady stream of high-profile hits.

When performance fell short, Microsoft took decisive action. Xbox’s roster of internal development teams has since been trimmed down to 28, with major intellectual properties shifted between divisions. Notably, XBOX’s iconic Halo franchise is transitioning to Activision, while the upcoming Fable reboot remains with Forza Horizon developer Playground Games.

The recent changes across the division is as follows:

  • Compulsion Games & Double Fine: Regained their independent status.
  • Undead Labs: Departed the Xbox ecosystem.
  • Ninja Theory: Placed under review, triggering consultations regarding a potential closure.
  • Turn 10 Studios: Merged directly into Playground Games.
  • Rare & World’s Edge: Reallocated into Activision’s structure.
  • Obsidian Entertainment: Integrated into Bethesda’s structure.

Stay tuned to LEVEL UP for continuing updates.