Craig Duncan stepped down as head of Xbox Game Studios after leading the division for about 18 to 20 months, the company announced in mid-June 2026 [1, 2, 3, 4, 5]. Louise O'Connor, the studio's chief of staff and fellow Rare alum, also left alongside Duncan [1, 2, 3, 4, 5]. Until a replacement is named, Xbox Game Studios studios will report to chief content officer Matt Booty [1, 2, 3, 4].
Duncan previously spent nearly 14 years leading Rare, overseeing titles such as Sea of Thieves and several Kinect games [1, 2, 6, 3, 4]. Reflecting on his tenure, he said, "When I stepped into the role of leading XGS 20 months ago, my purpose was to serve our studios, our teams, and the people making our games. Together, we set out to deliver high-quality games, strengthen the cultural fabric across our studios, and help shape the future of the business. I’m proud to say we delivered many flawless launches that drove business success for the company." He also praised O'Connor, saying, "Louise has been a thoughtful, creative, and trusted partner who has consistently championed the craft and supported our studios with clarity and care." [1]
The leadership changes come amid a sweeping Xbox business reset led by CEO Asha Sharma, who took over earlier in 2026. Sharma announced plans to slash budgets and enact significant layoffs across Xbox's gaming division [1, 7, 8, 2, 5]. She outlined the financial pressures driving the reset: "Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue." [9]
Several Microsoft-owned Xbox game studios, including Compulsion Games, Double Fine, and Ninja Theory, are reportedly negotiating to buy back their independence to avoid potential shutdowns or staff cuts [7, 10, 8, 9, 11]. Even if independence is gained, layoffs are expected at these studios, which remain at risk of closure [7, 10, 8, 9, 11]. Compulsion Games' South of Midnight, released last year to critical acclaim, faces uncertainty despite its success [7, 8]. Compulsion employs over 90 developers [7].
Xbox is also accelerating development on key franchises such as Halo and Elder Scrolls amid the reset efforts [10, 9, 11]. There is speculation that Xbox may restructure or spin off its gaming division [10, 9]. Layoffs affecting Xbox staff are expected to begin as early as July 2026 [7, 10, 8, 11].
Despite the turmoil, Xbox Game Pass continues adding new titles including EA Sports FC 26 and Call of Duty Vanguard as part of its June 2026 Wave 2 update [9].
The next major milestone will be the start of the planned layoffs and potential studio closures, expected to begin next month.
