Xbox Allegedly Walks Back Game Pass Deals, Leaving Third-Party Studios in Doubt

Xbox’s ongoing turbulence has reportedly reached a new front: the platform holder is said to be backing away from agreements with outside studios that would place their games on Xbox Game Pass.

The latest claim lands after a string of unsettling signals for the business, including studio shutdown chatter, widespread layoffs, and multiple rounds of pricing increases for Xbox hardware and related offerings.

Xbox Is Reportedly Pulling Back From Third-Party Game Pass Deals

Asha Sharma’s time as Xbox CEO started with a burst of optimism earlier this year. After Phil Spencer stepped away along with parts of his inner circle, Sharma’s messaging initially resonated with Xbox players. She promised a renewed focus on Xbox exclusivity, moved to remove the AI assistant “co-pilot,” and even shared the working name for Microsoft’s next console: Project Helix. For a while, it looked like a clear course correction.

But the mood has shifted. In recent weeks, Sharma acknowledged that Xbox “isn’t healthy,” and the fallout appears to be spreading across the company and its partners. Compulsion Games, known for the award-winning South of Midnight, was reported to be closing, and layoffs followed soon after. Compulsion wasn’t the only studio believed to be affected.

Reports also pointed to Bethesda, ID Software, and BioWare being caught up in what was described as a “Massive Bloodbath,” along with Ninja Theory and Double Fine. Then came the consumer-facing pressure: Xbox has pushed through its fourth price increase since 2023. Over roughly three years, the console’s price reportedly moved from $599.99 up to $799.99.

Now, a fresh report adds more detail to the picture. Arrowhead Studios CEO Shams Jorjani and Fernando Rizo from Kaboodle Games say Xbox may be stepping back from deals with third-party publishers that would bring their titles to Game Pass.

Rizo shared the claim while speaking on the Business of Video Games Podcast. He described being at an industry event in Italy called First Playable, where he said he had positive conversations with other industry figures. He then relayed what he’d been hearing: that many developers and publishers who were in discussions for Game Pass were left without closure because the agreements were abruptly stalled.

He said, “I was at a very nice industry trade show in Italy, First Playable. I had some nice lunches with industry colleagues. Word on the street is that loads of people who were in the frame for Game Pass deals, i.e., you know, nothing was inked yet, but the deals were in advanced discussions. Everybody got the rug pulled out from under them.”

Everybody got the rug pulled out from under them.

When Jorjani reacted in surprise and asked what that meant, Rizo replied that Game Pass itself likely isn’t finished. In his view, leadership changes and messaging around the service suggest it’s being paused while the company recalibrates. He also pointed to what Kaboodle had already done earlier in the year, implying that deal activity may have slowed after that point.

Rizo said, “I don’t think Game Pass is over. I mean, given that the new incoming leadership has talked a lot about Game Pass and talked about… I think they’re on pause. I think they’re figuring it out. That’s my read anyway. For the time being… We just did one at Kaboodle earlier in the year, and I get the feeling that it might have been one of the last ones that did.”

During the same discussion, Jorjani also appeared to reinforce rumors that Ninja Theory is closing. For Xbox, the situation is being framed as more than just a business adjustment—it’s also being seen as further erosion of trust among studios and partners.

Why This Matters for Players: Game Pass’s Partner Pipeline

If Xbox is indeed pausing or reducing third-party Game Pass commitments, the impact won’t be felt only by publishers—it will show up in the library itself. Game Pass relies on a steady flow of timed and long-term partnerships, and those “advanced discussions” Rizo described suggest that projects were being positioned for the service before the rug was pulled.

For players, that’s a practical concern: fewer confirmed third-party arrivals can mean longer gaps between major releases or a shift toward a smaller set of partners who can secure deals under tighter terms. Even if Game Pass isn’t ending, a pause in deal-making can still alter what subscribers expect to play month to month.

Xbox’s Internal Turmoil Is Starting to Bleed Into Strategy

The report ties together a series of disruptions—studio closure rumors, layoffs, and price hikes—under the umbrella of Sharma’s admission that the company “isn’t healthy.” When corporate instability hits, it often leads to slower decision-making and more cautious budgeting, especially around multi-year subscription economics like Game Pass.

That context helps explain why outside studios might feel blindsided even when contracts haven’t been fully inked. If leadership is reworking priorities, negotiations that were previously progressing can be abruptly halted, leaving partners in limbo.

What to Watch Next: Whether Game Pass Deals Resume

Rizo’s comments point to a “pause” rather than a full stop. That nuance is important: it suggests Xbox could return to third-party agreements once it “figures it out,” but the timing and conditions may change. If Kaboodle’s earlier deal is indeed among the last of its kind for now, players may see a quieter stretch for third-party additions while Xbox recalibrates.

• Rizo claims many Game Pass discussions were advanced but then cancelled or stalled before agreements were finalized.
• He argues Game Pass isn’t over, but that deals may be on pause while new leadership reassesses the service.
• Jorjani’s remarks also align with rumors around Ninja Theory’s closure.
• Any pause in third-party deals could affect how quickly Game Pass refreshes its lineup for subscribers.