Microsoft weighs – Microsoft is preparing a wave of layoffs for its Xbox division starting July 6, with plans that could include closing or spinning off multiple studios. Among the studios under review is Arkane, the France-based developer behind Dishonored and the Marvel’s Blad
Microsoft’s Xbox plans are tightening so fast that even timelines inside the company are starting to feel negotiable. Next week, the company is expected to announce layoffs across its gaming organization, a move that could ripple into studio closures, mergers, and canceled games.
At the center of that pressure is Arkane Studios, the France-based developer best known for Dishonored. Sources familiar with Microsoft’s plans say the company is weighing closing at least five studios. including the team behind Marvel’s Blade. and that Blade is being targeted as part of a broader cost-cutting and job-loss push.
The game was originally intended to debut later this year. But internal timelines have shifted. Sources say the internal ship date for Marvel’s Blade has slipped to late 2027, and the project is also running over budget.
While Blade faces uncertainty, Arkane itself may not be headed for the same fate. Sources say Microsoft is exploring options to sell Arkane Studios instead of shutting it down. The effort to find buyers isn’t limited to Arkane. Bloomberg reported earlier this month that Microsoft is trying to spin off Compulsion Games. Double Fine. and Ninja Theory as well. This week. GamesBeat reported that Microsoft is actively looking for a buyer for Undead Labs. the developers behind State of Decay.
Those talks, in theory, could keep studios alive. But the timeline is part of the strain: sources stress that even if buyers are found, discussions in some cases could take months.
In the meantime, employees are already absorbing the message. Compulsion Games. known for South of Midnight. is already telling staff to look for jobs elsewhere. with the studio’s leadership apparently convinced closure is imminent. At Ninja Theory. employees were informed earlier this month that Microsoft wants to close the UK-based studio or spin it off.
The broader shake-up is expected to land with a start date. Sources say the upcoming layoffs at Xbox are scheduled to begin on July 6, and will hit most parts of Xbox. Rumors have suggested there could be at least 1,000 job losses. If Microsoft proceeds with five studio closures, sources say at least 500 employees could be impacted before the wider cuts.
The changes are being tied to a “reset” under new Xbox CEO Asha Sharma. She hinted about “making hard choices” last month, while repeatedly warning that the Xbox business isn’t healthy. Sharma has also insisted that her goal isn’t limited to profit targets. She said her “mandate is not 30 percent accountability margins… it’s to be the number one gaming and entertainment company, and that’s what we’re going to do.”.
That tension—between a push for a more ambitious future and the reality of shrinking teams and stalled projects—is shaping how employees and studios are bracing for what comes next. For people tied to Arkane and the other companies under review. the question now isn’t only whether games will ship. but whether their studios will still exist long enough for the next release cycle.
Microsoft Xbox layoffs Asha Sharma Arkane Studios Blade game Marvel's Blade Dishonored studio closures Compulsion Games South of Midnight Ninja Theory Undead Labs State of Decay Double Fine spin-off