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Microsoft super-sizes first-party studio system

Xbox One maker acquires Ninja Theory, Playground Games, Compulsion Games, and Undead Labs, establishes new studio The Initiative

Microsoft's first-party studio system has been the subject of some scrutiny in recent years, but the company used its E3 media briefing to unroll a substantial expansion and reinvestment on that front, with the creation of one new studio and the acquisition of four more.

Starting with the acquisitions, Microsoft took two close partners and formally brought them into the fold, and reached out to acquire two more companies. Starting with its existing partners, head of Xbox Phil Spencer announced that Microsoft has acquired Forza Horizon developer Playground Games as well as State of Decay studio Undead Labs.

The other acquisitions include Ninja Theory, creator of Sony's 2007 PlayStation 3-exclusive Heavenly Sword and last year's critically acclaimed Hellblade: Senua's Sacrifice, as well as Compulsion Games, developer of the Early Access title We Happy Few and 2013's Contrast.

Finally, Spencer announced a new studio, The Initiative, based in Santa Monica and led by Darrell Gallagher. Gallagher was brought on board earlier this year to join the executive leadership team of Microsoft Studios, with previous stints at Square Enix, Rockstar, Sony, and more than a decade at Crystal Dynamics. It was not clear what the studio's focus would be other than working on new experiences.

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