As part of the Xbox layoffs scheduled to begin on July 6, Microsoft is considering closing Arkane Studios and canceling Blade The game has been working on since the end of 2023, according to Tom Warren at The Verge. Combine this with previous reports from Bloomberg again GamesBeatand it looks like Microsoft is preparing to close or sell five studios next week: Compulsion Games, Double Fine, Ninja Theory, Undead Labs and Arkane.
There was no update Marvel’s Blade more than two years, despite our quiet expectations, and The Verge reports that the game is over budget and facing delays. Xbox is looking at options to sell Arkane, similar to its reported approach with Compulsion, Double Fine, Ninja Theory and Undead Labs.
The entire Xbox division is looking at layoffs following a memo from new CEO Asha Sharma and Chief Content Officer Matt Booty that warned, “We’ve found ourselves too stretched…. Going forward, this cannot continue.” Members of the Xbox union represented by the CWA expressed their disappointment and frustration with Microsoft’s leadership before the firing, calling for open-minded discussions and transparency.
Arkane Studios is better known as Arkane Lyon, creator of the Dishonored series as well Deathloopand the team is known for making polished first-person shooters in stylish environments. Microsoft shut down the studio that Lyon’s sister, Arkane Austin, ran A deer (yes) again Redfall (oh no), as part of a wave of Xbox layoffs and studio closures in 2024.
Meanwhile, Arkane Lyon director Dinga Bakaba shared the following message:
“This is really bad. Permission to be human: To any manager reading this, a friendly reminder that video games are an entertainment/culture industry, and your business as an organization is to take care of your artists/entertainers and help them make a profit. Don’t throw us in gold tournaments, don’t use us as strawmen to make mistakes/don’t do wrong things/don’t make bad spots. proud when we make a good game, proud when times are tough.
The video game market is set to lose an estimated 14,600 workers to layoffs in 2024, following an already impressive loss of 10,500 in 2023, according to the Game Industry Layoffs tracker.
Microsoft’s purchase of Activision Blizzard King for $69 billion – the largest acquisition in the history of the industry – was completed in 2023, following the company’s purchase of ZeniMax for $7.5 billion (including Arkane Studios) in 2021 and previous game studio purchases.
In January 2024, Microsoft cut 1,900 jobs at Xbox, Activision, Blizzard and ZeniMax, starting another bad year of layoffs in sports. Xbox closed Arkane Austin and Alpha Dog Games, sold Tango Gameworks, and laid off an additional 650 employees by 2024. The Xbox division has also been rocked by layoffs and studio closures in the summer of 2025, with Microsoft laying off 9,000 workers across the company.
It looks like the 2026 Xbox teardown has already affected Hitman once again 007 First Light developer IO Interactive, which was reportedly working on a fantasy game with Xbox as its publisher. The IOI has announced that its relationship with an “external partner” has recently ended and it has had to cut staff as a result. On the flipside, it’s a Kojima Productions game ODpublished by Xbox, will not be affected by the layoff, according to IGN.
