Xbox is reportedly considering closing or selling Arkane Studios and canceling the developer's next game, Marvel's Blade, as part of a widely reported, impending tsunami of July layoffs bookending Microsoft's fiscal year.
The Verge reports that Arkane is one of at least five studios on the chopping block. With Marvel's Blade reportedly over budget and unable to meet a planned 2026 release date, it and Arkane may be caught up in Microsoft's extremely aggressive cost-cutting measures.
Arkane's Jean-Luc Monnet said just this month that Marvel's Blade is not canceled, as fears circulated around Summer Game Fest. "Let us cook," he said.
However, just as reports indicated that Xbox studios like Double Fine or Ninja Theory may be spun off or sold to buyers, The Verge reports Microsoft is also "exploring options" to sell Arkane rather than shutter it outright.
Xbox has a history of acquiring and swiftly closing studios, often before they're able to release even two games, which has spoiled attempted rebrands and soured some opinions of the company. This expected July bloodbath comes years after the company's, and the games industry's, biggest-ever acquisition in Activision Blizzard, which has not reversed the struggling Xbox platform's fortunes.
In 2024, Xbox closed Arkane Austin after the predictably disastrous release of live service game Redfall, which Xbox leadership reportedly dumped on the studio despite its history of single-player hits. Arkane founder Raphael Colantonio called the decision "stupid."
Compulsion Games, also part of Xbox and maker of award-winning action game South of Midnight, seems to be struggling to find its own buyer and advised employees to look for work elsewhere.
Amid what new Xbox CEO Asha Sharma has called a "reset" for the brand, reports suggest the company's latest attempt at reducing costs may, at the very least, see some studios survive independently or under new owners. Even then, layoffs at the affected studios are likely as they adjust to their new environment and reconfirm funds.
Last week, Xbox announced yet another console price hike, making the disc drive-equipped Xbox Series X an eye-watering $800 at a baseline. Macro economic pressures on the games industry have only compounded rising costs in the space and at Microsoft, which has been forced to rethink its new-gen console Project Helix.
