Microsoft is reportedly preparing for significant layoffs across its Xbox division, a move that could lead to the closure of Arkane Studios and the cancellation of its upcoming Marvel's Blade game. According to sources cited by The Verge, these widespread job cuts are slated to be announced next week.
Arkane Studios, known for its work on the Dishonored series, Deathloop, and Prey (2017), is among the studios potentially facing closure. The development of Marvel's Blade, an upcoming title based on the iconic Marvel character, is also reportedly on track for cancellation. The game was initially expected to launch later this year but has since seen its internal ship date pushed to late 2027, with reports indicating it is running over budget.
Marvel's Blade was officially announced in December 2023, though gameplay has yet to be revealed. In a departure from Arkane's typical first-person offerings, the game is designed to be played from a third-person perspective. The studio's most recent release, Redfall, which came out in 2023, did not meet expectations, receiving negative reviews and experiencing what Microsoft described as minimal sales.
This potential cancellation marks another setback for the Marvel's Blade project, which has faced development challenges within the Marvel Cinematic Universe itself, including directorial changes and script revisions. Reports have surfaced suggesting a shift in focus towards a potential Midnight Suns movie.
While the shuttering of Arkane Studios is a possibility, Microsoft is also reportedly exploring options to find buyers for other studios facing potential closures, including Compulsion Games (South of Midnight), Double Fine, Ninja Theory (Hellblade), and Undead Labs (State of Decay). However, even if these studios are acquired, layoffs are still considered likely.
The current restructuring follows a period of executive changes within Xbox. Asha Sharma assumed leadership in February, and since then, several high-ranking executives have departed, including Craig Duncan, head of Xbox Game Studios, and Louise O’Connor, Xbox Game Studios chief of staff.
In an open letter posted on June 10, Sharma and Xbox chief content officer Matt Booty announced plans for a division-wide "reset." They cited substantial investment in Xbox over the past five years, totaling over $20 billion, alongside a decline in annual revenue by half a billion dollars during the same period. The letter also pointed to challenges with hardware supply, issues within the game development pipeline leading to fewer releases, and difficulties with platform infrastructure.
Insiders suggest that the impending reset will involve one of the largest layoff events in gaming history, potentially affecting studios beyond those slated for closure, such as Bethesda and Blizzard. The video game industry has seen considerable turmoil in recent years, marked by widespread layoffs and studio closures, with indications that further difficulties may lie ahead.