Microsoft plans to shut down Arkane Studios and cancel Blade amid Xbox layoffs

Microsoft is preparing to implement a new round of Xbox layoffs starting July 6, which may include the closure of Arkane Studios and the cancellation of the Marvel-based Blade game that has been in development since late 2023. The move follows earlier reports that the company could also sell or shut down four other studios—Compulsion Games, Double Fine, Ninja Theory and Undead Labs.

According to a report cited by The Verge, the Blade project has exceeded its budget and is delayed, prompting Xbox to explore options to discontinue it. Arkane, known for titles such as the Dishonored series and Deathloop, is also being considered for sale, mirroring the handling of the other studios.

The layoffs were announced in a memo from Xbox chief executive Asha Sharma and chief content officer Matt Booty, which warned that the division had become "over-extended" and could not continue on its current trajectory. Union representatives from the Communications Workers of America have expressed disappointment and called for transparent negotiations with Microsoft leadership.

Industry data shows the video-game sector lost roughly 14,600 jobs to mass firings in 2024, adding to a loss of about 10,500 jobs in 2023, according to a layoffs tracker. Microsoft’s $69 billion acquisition of Activision Blizzard King was completed in 2023, following its $7.5 billion purchase of ZeniMax Media, the parent of Arkane, in 2021. The company previously cut 1,900 jobs across Xbox, Activision, Blizzard and ZeniMax in January 2024 and announced further reductions in 2025.