Xbox has initiated a significant restructuring that involves spinning off five major studios and enacting substantial layoffs. While some studios like Double Fine and Compulsion are regaining independence with Microsoft funding, and others like Ninja Theory and Undead Labs have been sold to new owners, the future of Arkane Lyon, the developer behind Dishonored and Marvel's Blade, remains under negotiation.
Microsoft acquired Arkane as part of the ZeniMax Media purchase in 2021. This latest upheaval follows the closure of Arkane Austin, the studio responsible for Prey (2017) and Redfall, in 2024. Arkane Lyon, now the sole remaining Arkane entity, operates under French labor laws. These laws mandate that employers consult with an in-office works council, known as a Comité Social et Économique, on significant organizational changes, including potential layoffs or ownership transfers. This council, formed by employee representatives, must be kept informed and consulted on matters affecting the company's operations.
Unlike the protections offered to Arkane Austin under U.S. labor laws, French legislation provides Arkane Lyon's employees with a more structured process for negotiating their future. Potential outcomes for Arkane Lyon could include being sold to a new owner, bought out by its management, or even a shutdown, with all possibilities reportedly on the table. The studio had approximately 206 employees in 2025.
While Marvel's Blade, an Arkane Lyon project, is reportedly running late and over budget, this is a common challenge for blockbuster game development. Arkane Lyon's previous title, Deathloop, achieved a player count of five million by February 2023, though this figure includes players who accessed it via Xbox Game Pass. Xbox CEO Asha Sharma's stated focus on the company's "core business" and a move away from acquiring independent creators might also influence Arkane's positioning within Microsoft's portfolio.
The timeline for resolving Arkane Lyon's future is unclear, as negotiations between Microsoft, studio leadership, and the works council could extend for days or months. Former Arkane co-founder Raphael Colantonio has publicly mused about the possibility of buying the studio back, but noted the current difficulty in securing investment for such ventures.