Xbox is reportedly considering permanently closing Arkane Studios and canceling the project. Sources at The Verge claim that, barring any surprise acquisitions, Microsoft’s next wave of cuts could see five studios shut down.

Microsoft’s next wave of cuts is approaching, and Arkane Lyon could be one of the studios hardest hit. According to sources at The Verge, the Redmond-based company’s move will involve significant staff reductions, closures, potential mergers, the spin-off of several developers, and sudden cancellations. In fact, Xbox’s top management is reportedly considering shutting down five subsidiaries and halting development on the new Marvel’s Blade game.

According to The Verge’s sources, Arkane Lyon’s project was originally slated for release at the end of this year. However, the release date was internally pushed back to late 2027. All signs point to development not going smoothly, as the project is exceeding Microsoft’s allocated budget and there is now talk of definitively ending its development.

While it is true that Microsoft is considering closing Arkane Studios, sources also claim that the company is exploring options such as selling the developer. This is not the first time we have heard something like this about an Xbox studio, as Bloomberg reported just a few days ago that Compulsion Games, Double Fine, and Ninja Theory are also looking for a buyer and/or want to become independent from Microsoft. In fact, some are already seeing the announcement of the new Senua game, presented at the Xbox Games Showcase 2026, as a way to attract buyers for Ninja Theory. Additionally, the latest rumours also suggest that Undead Labs, the developers of State of Decay 3, are in a similar situation. If these studios succeed and find a home outside of Xbox Studios, The Verge’s sources warn that these negotiations could last for several months in some cases.

Sources Indicate That Layoffs Will Begin on July 6

At the moment, none of this is official, and all the information surrounding the Microsoft layoffs comes from sources familiar with the operation. What we do know, confirmed by Xbox, is that the company plans a complete overhaul that requires making “difficult decisions.” Leaks suggest the wave of cuts will begin on July 6, so that is when we will find out which studios and employees will be affected.

Source: 3DJuegos