Key Takeaways
- Microsoft is reportedly considering closing or selling Arkane Studios, putting Marvel’s Blade at risk of cancellation.
- The reported Xbox restructuring could also impact Double Fine Productions, Compulsion Games, Ninja Theory, and Undead Labs.
- Layoffs are expected to begin next week as part of a broader reset across Microsoft’s gaming division.
- Microsoft has not officially confirmed the reported studio closures, job cuts, or project cancellations.
Fresh reports suggest Xbox could be heading into one of the biggest shakeups in its history. Coming just days after Xbox halted third-party Game Pass deals, Microsoft‘s gaming division is now said to be preparing another major round of layoffs, according to The Verge.
The reported plans include potential studio closures, game cancellations, and even sales of first party developers.
Among the biggest concerns is the future of Arkane Studios and its upcoming Marvel’s Blade, both of which are reportedly under internal review as Xbox reshapes its gaming business.
Arkane and Marvel’s Blade Face Microsoft’s Cost Cutting Plans
The most surprising claim centers on Arkane Studios, the acclaimed developer behind Dishonored, Dishonored 2, Deathloop, and Prey.
As The Verge notes, Microsoft is weighing either closing or selling the Bethesda Softworks and ZeniMax Media studio while simultaneously considering canceling Marvel’s Blade.
Sources cited in the report claim the superhero title has slipped from its original internal target to a projected 2027 release and is running over budget, making it vulnerable during the reported restructuring.
Engadget echoed the report while stressing that no final decisions have been announced publicly.
Only weeks ago, Bethesda executive Todd Howard said he had seen the project and believed the team was doing “a really, really good job,” making today’s reports an unexpected twist for one of the most anticipated Xbox games in development.
Xbox’s Reported Reset Could Reach Far Beyond Arkane
Arkane may not be the only studio caught in Microsoft’s reported overhaul. Earlier reports claim Double Fine Productions, Compulsion Games, Ninja Theory, and Undead Labs are also facing uncertain futures through potential closures, spin offs, or sales.
Compulsion, fresh off South of Midnight, has reportedly warned staff to prepare for possible shutdown, while Ninja Theory, the developer of Senua’s Saga: Hellblade II, could also be sold or separated from Xbox.
Undead Labs, known for State of Decay, is reportedly attracting buyer interest that could keep the studio operating independently.
The restructuring is also expected to include roughly 1,000 layoffs beginning next week, echoing with broader job cut trend, although Microsoft has yet to publicly confirm those figures or the broader plans.
A Defining Moment for Xbox’s First Party Future
The reports are particularly surprising given Xbox’s recent Games Showcase, which highlighted an ambitious lineup of upcoming first-party titles.
If these reported plans move forward, they would represent another dramatic chapter in Microsoft’s ongoing overhaul of its gaming business following the Activision Blizzard acquisition.
Last year’s closure of Arkane Austin already raised concerns about the long-term security of Xbox’s first-party studios, and the possibility of losing Arkane Lyon or Marvel’s Blade would only deepen that uncertainty.
For now, however, the story remains based on reports rather than official announcements.
Until Microsoft addresses the claims, players and developers alike will be watching closely to see whether Xbox’s next reset truly reshapes one of gaming’s largest first-party portfolios or whether some of its most recognizable studios can still avoid the chopping block.
Source: Xbox weighs canceling Blade game and shuttering Arkane
