Microsoft’s next round of Xbox layoffs may be bigger than the industry expected, with reports suggesting that Arkane Studios – the French team behind ”Deathloop” and ”Dishonored” – could be shut down as part of a broad business reset. If that happens, Marvel’s Blade would almost certainly disappear with it, turning one of Xbox’s most closely watched licensed games into another casualty of corporate cleanup.
According to The Verge, the studios under review also include Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs. The same reporting says Microsoft is preparing layoffs across most Xbox divisions, with between 500 and 1,000 jobs at risk depending on whether any of those teams are sold rather than closed.
Arkane Studios and Marvel’s Blade
Arkane is the most eye-catching name in the pile. The studio has a strong pedigree, but pedigree does not buy much patience in a year of cost scrutiny. Marvel’s Blade was reportedly due in 2026 before slipping to the end of 2027, and the game is said to be over budget – usually the sort of combination that makes executives reach for a spreadsheet and a very large eraser.
That fits a broader pattern across gaming: publishers are trimming expensive bets, delaying releases, and asking studios to prove they can be profitable, not just admired on forums. Xbox has already been under pressure to make its acquisition spree produce clearer returns, so a shake-up like this looks less like a surprise and more like a hard pivot toward discipline.
Xbox studios at risk in the layoffs
- Arkane Studios
- Compulsion Games
- Double Fine Productions
- Ninja Theory
- Undead Labs
There is a possible off-ramp for some of these teams: The Verge says a sale could save a studio from closure, though negotiations could take months. That detail matters because it suggests Microsoft is not just pruning headcount; it may be testing whether parts of Xbox can be offloaded cleanly rather than dismantled in public.
Xbox layoffs begin on 6 July
The cuts are expected to start on 6 July, and sources told The Verge they could become the biggest wave of layoffs in Xbox history. Asha Sharma, who is driving the business reset, has framed the process as a painful but necessary move to improve the health of the division. That may be true – but for developers staring at a deadline, ”healthy” is doing a lot of work here.
The open question is how much of Xbox’s future will be built by smaller, safer bets rather than ambitious studio-led projects. If Microsoft follows through on these reports, the company may end up with a leaner Xbox – and a far less forgiving one.