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The future of Compulsion Games, Double Fine, and Ninja Theory are unclear. There are reports this week that Xbox is in discussion to shutter all three legendary studios, and rumors that the teams responsible for South of Midnight, Psychonauts, and Hellblade could buy back their independence. At a time where both first-party creative houses – PlayStation Studios and Xbox Game Studios – have shown little hesitation in closing development houses, the idea that these three could walk away seems unlikely. And while no two situations are alike, it isn't unheard of. Just look at Toys for Bob.
"Toys for Bob was acquired by Activision in 2005, and for many years we enjoyed a long and successful partnership," says studio head Paul Yan, who took on the role following the departure of founders Paul Reiche III and Fred Ford in 2020. It wasn't long before Yan was steering Toys for Bob through one of the most challenging periods in its 30 year history. "Covid hit, and the world turned upside down. There were many changes that happened as a result. One was a corporate mandate [at Activision] to support the large blockbuster IPs – Modern Warfare, Warzone, and Overwatch 2, to name just a few."
Before the studio was drawn into the Call of Duty ecosystem, it was doing industry-leading work – breathing new life into the mascots that fuelled the imaginations of an entire generation of millennials. It spearheaded the burgeoning Toys-to-Life genre with the Skylanders series, "an original IP inspired by Spyro" before being given the opportunity to go a step further.
As Yan explains: "We spent time meticulously handcrafting the first three classic Spyro games for the Reignited Trilogy, and we really got an understanding of the character during this period. And then we moved on to Crash Bandicoot, breathing new life into that series with a sequel, as well as an experimental multiplayer spin-off with Crash Team Rumble." It's a period of prolific creativity, where Toys for Bob was able to leverage its growing confidence and expertise into long-overdue platformers.
And then the world changed. "We learned a lot after we shifted into a support structure to assist other teams with various initiatives, games, feature-sets, and updates. We spread into a lot of territories that we weren't familiar with, or at least hadn't spent a lot of time with. We're very proud of the work that we did there, and of all of the collaboration. But if we're being honest with ourselves, we knew that we were just straying too far from the games that we're passionate about – that we're known for. So at that time, in the back of our mind, we knew we wanted to get back to them somehow."
Soon, Activision began to change too. In 2022, as Toys for Bob was supporting Infinity Ward to get Modern Warfare 2 out the door, Xbox announced its intention to acquire Activision Blizzard King for $68.7 billion. Former Xbox CEO Phil Spencer went on record to say that he was interested in Toys for Bob dusting off older Activision IP, but nothing changed. As the deal closed in 2023, Toys for Bob were locked into supporting development of Overwatch 2 and Modern Warfare 3. Then the Xbox layoffs hit. One of the Toys for Bob studios was shuttered. A month later, it was all change again – the studio secured its freedom.
"In 2023, Microsoft was in the process of acquiring Activision. This was a long, drawn out process which gave us a lot of time to soul search – to ask ourselves, well, how can we get back to the games we're passionate about making? So we got in front of leadership at both the Activision and Xbox level," says Yan. "We proposed a really bold plan. We asked that Toys for Bob would buy back its independence – taking creative, financial and organization control – to spin-off into a separate company. One where we could get back to the games we were known for, and preserve the tight-knit team and the long tenure that we had built up over the years."
There was a major caveat in the proposal. Toys for Bob needed the security of knowing that it would immediately receive funding for a project. So if Toys for Bob was going to spread its wings, it was going to do it with Spyro: the character that had first freed it from the trap of making Disney licensing games with Activision back in the early 00s.
How can we get back to the games we're passionate about making?
"The other half of the proposal was that the first game we would develop out of the game would be a new title for Xbox, and that it would be based on a concept that we had been stewing on ever since 2018," says Yan. "We learned a lot about Spyro in this time, and we had ideas on where the series could go and how we could evolve the character. So fast forward a bit, and leadership was very supportive of the move and of the game pitch. And for the last two years we've been quietly working on exactly that title: Spyro: A Realm Beyond."
Built in Unreal Engine 5, in development for PC, PS5, Nintendo Switch 2, and Xbox Series X, A Realm Beyond is in many ways a continuation of the iconic Insomniac era of games – with Toys for Bob leveraging everything it learned through remaking that trilogy and then pushing on beyond it. Given how eager Toys for Bob was to regain its independence, I was curious as to why the studio would draw such a hard line in the sand – that it would get what it wanted, only so long as Xbox funded the group as a third-party entity.
Granted anonymity to speak candidly about the situation, multiple staffers at Toys for Bob have told me that it would have been 'near suicidal' to reenter the market without a project in active development, and that the arrangement works for everybody involved: the studio regains control of its future and a degree of security; Xbox gets to revive a legacy IP the community is desperate to see return with little risk; and that this could all ultimately lead to a fruitful partnership between the two in the future.
When I spoke with Xbox's executive vice president and chief content officer last week, Matt Booty didn't wholly shut down the question of whether third-party studios could be entrusted to revive other IP that the publisher has in the vault in the future: "I think the answer is there are options to do all kinds of things, and we're certainly looking at those all the time."
I did ask Toys for Bob associate creative director Lou Studdert why the studio went all-in on Spyro, rather than, say, Banjo-Kazooie, and he was clear about the studio's priorities. "Spyro has a deep place in the studio's heart. Having worked through Skylands and the Reignited trilogy, we've always admired that small but mighty underdog story of the character taking on these overwhelming odds – we see ourselves in that a little bit. And, honestly, it was also a no-brainer."
Yan adds: "Going independent meant taking a massive, massive risk. It's taking a bet on ourselves, but we had confidence in making that move [...] Reignited sold over 11 million copies, so there's an audience that showed up for the series."
As my time with Toys for Bob drew to a close, I asked Yan whether there was ever a world where the studio would have pursued independence without the Spyro sequel in place. "The proposal that we had was complex, and that was part of the equation from the beginning. That in order for us to pursue this, we would go independent. Is there a possibility that could have happened in some other alternate timeline?"
"I can't speak to that, but I can say that those two things together are exactly what we proposed," he says. "That Toys for Bob would spin off and have control over the types of games we wanted to focus on, and that Spyro would be number one."
Spyro: A Realm Beyond is set to release in 2027, although it doesn't have a confirmed release date. Toys for Bob may be developing the title as an upcoming Xbox Series X game, but it's also set to launch for PC, PS5, and Nintendo Switch 2.
