Xbox Reportedly Considering Closing Arkane Studios & Canceling Marvel's Blade

In what could be one of the most devastating blows yet to Xbox's first-party portfolio, multiple reports published Tuesday indicate that Microsoft is seriously considering shutting down Arkane Studios — the acclaimed French developer behind the Dishonored series and Deathloop — as part of an upcoming wave of layoffs expected to hit in July 2026. Alongside the potential studio closure, Marvel's Blade, the ambitious action game Arkane has been quietly developing, may also be cancelled outright. Sources indicate the title is reportedly over budget and has suffered significant delays, making it a likely casualty in Xbox's ongoing cost-cutting efforts.

The situation, however, may not be entirely without hope for the storied studio. GamesRadar reports that a sale of Arkane Studios to another publisher remains a possibility, which could preserve both the team and the Blade project — or at least the studio's future output. Still, with the so-called "July bloodbath" of layoffs looming, the clock appears to be ticking. Arkane's Lyon studio, responsible for developing Marvel's Blade, has kept an extraordinarily low profile on the project since its announcement, and these latest reports suggest the silence may have been a sign of deeper trouble behind the scenes.

Sources