Microsoft has acquired Twisted Pixel, developer of Xbox Live Arcade titles Splosion Man and Gunstringer.
"Twisted Pixel has an incredible track record of delivering innovative, critically acclaimed, and most importantly, fun, games," said Phil Spencer, corporate vice president of Microsoft Studios.
"Microsoft Studios is home to cutting-edge entertainment experiences, and the incredible creativity of the Twisted Pixel team will help drive further innovation around Kinect and Xbox Live."
The independent studio was founded in 2006 - it now joins other internal Microsoft teams such as Rare and Lionhead.
"It is really exciting for us to solidify our long-standing relationship with Microsoft Studios, who we consider to be the leader in digital distribution and creating new innovations in gaming like Xbox Live and Kinect," said Michael Wilford, co-founder and chief executive officer of Twisted Pixel.
"As part of the family of Microsoft Studios we look forward to bringing even bigger and richer experiences to Xbox and Twisted Pixel fans around the world."