Netflix has announced the closure of Night School Studio, the developer behind Oxenfree and Unhinged, just weeks after the release of its latest narrative horror title. The move is part of a wider restructuring of Netflix's gaming division
Netflix has confirmed the closure of Night School Studio, the Los Angeles-based developer best known for Oxenfree and its recent horror release Unhinged. The decision comes as part of a broader restructuring of Netflix's internal games operation, which also includes the shutdown of Moonloot, a Helsinki studio that had not yet released a title. Both studios were informed of the closures this week, with Netflix stating the move is intended to focus its gaming efforts more tightly.
Studio Closures and Organisational Shift
Night School Studio, acquired by Netflix in 2021, had established a reputation for narrative-driven experiences, most notably with Oxenfree and its sequel. The studio's latest project, Unhinged, launched on 30 June 2026, just six weeks before the closure announcement. Moonloot, meanwhile, was working on an unannounced life-simulation project but had not reached release. Netflix described the closures as a step towards streamlining its games business, expressing gratitude to departing staff but offering no details on future internal development plans.
Unhinged Release and Performance
Unhinged, a first-person horror game developed in collaboration with Weapons director Zach Cregger and featuring performances from Sadie Sink and Zoë Kravitz, was released exclusively on Netflix's platform. The game was positioned as a choose-your-own-adventure experience and received positive early reviews for its branching narrative and atmosphere. During Netflix's July 2026 investor call, co-CEO Greg Peters described Unhinged as one of the company's most successful cloud game debuts, placing it in the top tier of game performance for the service. However, this commercial and critical momentum was not enough to prevent the studio's closure.
Impact on Netflix's Gaming Strategy
The closure of Night School Studio follows a pattern of recent studio shutdowns within Netflix's gaming division. Team Blue, founded in 2022 and closed in 2024 without releasing a game, and Boss Fight Entertainment, acquired in 2022 and shuttered in 2025, both preceded this latest move. Netflix has framed these decisions as part of a "less-is-more strategy", focusing on a smaller number of projects with higher impact. Despite the reduction in internal studios, Netflix maintains that games remain a key area for expanding its entertainment offering, though the company's long-term approach to in-house development remains unclear.
Industry Context and Staff Reaction
Reactions from Night School staff have begun to appear on professional networks, with former team members expressing pride in Unhinged's reception and disappointment at the abrupt end to the studio's run. The closure also highlights ongoing volatility in the games industry, where even well-received releases do not guarantee studio security. This trend has been observed across the sector, as seen when id Software staff publicly criticised Xbox following significant layoffs earlier this year, as reported in our coverage of the id Software layoffs.
Understanding the difference between a studio closure and a project cancellation is important for players. A studio closure means all ongoing and future projects from that team are halted, and staff are let go or reassigned. In contrast, a project cancellation may leave the studio intact for future work. Studio closures can affect post-launch support, updates, and the long-term availability of games, especially when tied to platform-exclusive releases or subscription services. For players, this can mean uncertainty around future content, bug fixes, and the preservation of narrative-driven titles like those produced by Night School Studio.
