Microsoft bloodbath continues 9,000 layoffs later with the death of Contraband, the '70s co-op game from the studio behind open-world hit Just Cause, and it seems Hideo Kojima's OD is the only thing that's safe

Avalanche Studios has confirmed that development on Contraband, the Xbox-exclusive '70s co-op game, has ended. The news comes a month after mass layoffs at Microsoft affecting 9,000 employees, which included many in the gaming division and led to the cancellation of projects like Everwild and the long-delayed Perfect Dark.

"Over the past several years, Avalanche Studios Group and Xbox Game Studios Publishing have collaborated on Contraband," the developer says in a statement. "Active development has now stopped while we evaluate the project's future. We're thankful for the excitement we've seen from the community since we announced and will give an update on what's next as soon as we can."

Insiders Jason Schreier and Stephen Totilo both report that the end of development was a Microsoft decision, though they say other Xbox publishing agreements with third-party studios – including Hideo Kojima's OD – are still alive.

OD, the collaboration between Xbox and Hideo Kojima, is still in development, a Microsoft spokesperson tells me.

— @jasonschreier.bsky.social (@jasonschreier.bsky.social.bsky.social) 2025-08-07T17:45:17.724Z

"Microsoft declined to provide a comment on the game’s fate," Totillo says in his Game File newsletter, "but a source familiar with the matter noted that production—which is now 'on hold'—had been ongoing for five years and that the company avoids cancellations as much as possible."

Contraband was announced back at E3 2021 – yes, the announcement is old enough that E3 still existed – with a brief teaser trailer and the promise of "a co-op smuggler's paradise." Effectively zero details on how the game would play were ever revealed, but Avalanche's pedigree in open-world chaos with titles like Just Cause and Mad Max had many hopeful about the possibilities of the studio taking on a co-op game. But it seems we'll never see what the studio had in store.

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