Two senior leaders at Microsoft’s Xbox Game Studios are leaving the company, according to reports, adding to uncertainty surrounding the future of the gaming division as concerns grow over potential layoffs and restructuring.
Head of Xbox Game Studios Craig Duncan and Louise O’Connor, the division’s chief of staff, are both departing after lengthy careers with Microsoft and its UK-based studio, Rare. The departures were first reported by The Game Business.
Neither Microsoft nor the executives have publicly provided a reason for the move. However, the exits come during a period of heightened scrutiny over Xbox’s financial performance and the future of several first-party development studios.
Recent comments by Xbox chief Asha Sharma regarding the division’s narrow profit margins have fuelled speculation that additional cost-cutting measures could be on the horizon. Reports have suggested that layoffs may take place in the coming months as Microsoft seeks to improve the business’s financial results.
Industry observers have expressed concern for several smaller Xbox-owned studios that have struggled to produce major commercial hits in recent years. Among those frequently mentioned are Compulsion Games, creator of South of Midnight, Double Fine Productions, known for titles including Kiln and Keeper, and Turn 10 Studios, which has already undergone workforce reductions.
Duncan joined Rare in 2011 and spent more than a decade leading the studio. During his tenure, the developer transitioned from the Kinect Sports era to the successful launch and long-term support of the pirate adventure game Sea of Thieves, one of Xbox’s most successful live-service titles.
O’Connor’s history with Rare stretches back even further. She joined the studio in 1999 as an animator and worked on the cult-classic Nintendo 64 title Conker’s Bad Fur Day. More recently, she oversaw development of the fantasy role-playing project Everwild before its cancellation.
In an internal email reported by The Game Business, Duncan reflected on his time leading Xbox Game Studios.
‘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,’ he wrote. ‘Together, we set out to deliver high-quality games, strengthen the cultural fabric across our studios, and help shape the future of the business.’
He also praised O’Connor’s contributions, describing her as a trusted partner who consistently supported Xbox’s studios and creative teams.
For now, leadership responsibilities previously held by Duncan and O’Connor will be absorbed by Xbox chief content officer Matt Booty, with studio heads reporting directly to him.
The departures come as Microsoft continues to evaluate the future of its gaming business following years of acquisitions and expansion. Analysts recently suggested that studio closures and new revenue-generating initiatives, including a potential ad-supported version of Xbox Game Pass, could be considered as the company works to improve profitability.
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