Xbox did not need another reason for developers to feel nervous. The company is already dealing with layoff fears, studio closure reports, and a first-party lineup that looks more uncertain every week. Now one of the people in charge of that studio group is leaving too.
Craig Duncan, the head of Xbox Game Studios, is stepping down after about 18 months in the role. Xbox Game Studios chief of staff Louise O’Connor is also leaving, putting two senior departures on top of an already messy moment for Microsoft’s gaming business.
Duncan moved into the Xbox Game Studios job in late 2024 after leading Rare, the studio behind Sea of Thieves. O’Connor also came from Rare, where she had worked for decades before moving into a senior Xbox role.
Their exits would have drawn attention at any time, but the timing makes this feel bigger than a normal leadership shuffle. Xbox is in the middle of a wider reset, with Microsoft reviewing how much it has spent, how many teams it is supporting, and which projects still fit the company’s plan.
Matt Booty is expected to oversee Xbox Game Studios while Microsoft looks for a replacement. That keeps someone in charge, but it does not calm the larger worry around the division.
Reports around Xbox have become increasingly grim, with layoffs, project cuts, and possible studio shutdowns all hanging over the company’s internal teams. Microsoft has not publicly confirmed every studio-specific claim, so the details still need caution.
Xbox spent years buying studios and telling players that those teams would get support, stability, and room to build. Now some of those same teams are being discussed in the context of closures, sales, or spinouts.
That changes how people read Duncan and O’Connor leaving. It is not just about two executives moving on. It is about leadership changing while developers below them are waiting to find out whether their studios still have a place.
Microsoft will keep protecting the names that sell subscriptions, drive engagement, and carry obvious business weight.
The harder question is what happens to the studios that made Xbox feel more interesting between the giant releases. Teams behind smaller or stranger games have always been part of the appeal of Xbox’s first-party pitch, because they gave the platform texture beyond the expected blockbusters.
When creative teams are the ones that look most vulnerable, players start to wonder whether Xbox still wants the variety it once promised.
Duncan and O’Connor leaving does not confirm more closures by itself. It does, however, add to the sense that Xbox is changing faster than the company is explaining.
Microsoft can talk about a reset, but developers need something more concrete than broad strategy language. They need to know which projects are safe, which teams are being reviewed, and whether the company still believes in the studio network it spent years building.
For players, xbox can still have huge franchises and a full release calendar, but if the studios with personality keep disappearing, the first-party lineup will start to feel much smaller than the number of logos suggests.
