Yesterday, Xbox announced a major wave of restructuring that includes 1,600 immediate job cuts and an additional 1,600 layoffs planned for the next financial year. While several studios like Double Fine and Compulsion are spinning off to become independent, and others like Ninja Theory and Undead Labs have been sold to new owners, the future of Marvel's Blade developer Arkane Lyon remains in limbo.
Following the 2024 closure of Arkane Austin, the Lyon team is the sole remaining arm of the studio under the ZeniMax umbrella. Unlike their US counterparts, the French-based team is subject to strict labor laws that mandate the formation of a Comité Social et Économique (work council). This body must be kept informed and consulted on any changes to company organization or potential layoffs. Consequently, Microsoft is currently locked in negotiations with the studio's management and its work council to decide on a path forward.
What Lies Ahead for the Studio?
According to recent reports, every option is currently on the table for the 206-person team. While there is speculation regarding a potential sale or even a management-led buyout, nothing has been confirmed. Raphael Colantonio, the former co-founder of Arkane, expressed interest in a potential reunion on social media but noted that he lacks the necessary capital, stating that current investors are largely focused on AI rather than traditional studio acquisitions.
Internal friction may also play a role in Microsoft's desire to distance itself from the developers. In 2025, Arkane workers made headlines for an open letter protesting Microsoft’s involvement with the Israeli military, adding a layer of corporate tension to the ongoing restructuring discussions. These negotiations could span anywhere from a few days to several months.
Shifting Focus at Xbox
The uncertainty surrounding Arkane Lyon arrives alongside broader changes under Xbox CEO Asha Sharma, who has signaled a pivot toward the company's "core business"—titles such as Fallout, Forza, Candy Crush Saga, and Minecraft. This strategy appears to deprioritize what some have characterized as the niche, "intricately depressing" projects often associated with the French studio.
While The Verge reported that Marvel's Blade is currently behind schedule and over budget, such issues are common in large-scale game development. Arkane Lyon’s most recent major title, Deathloop, saw some success, reaching five million players by February 2023, bolstered significantly by its inclusion in the Xbox Game Pass library. Despite this, the studio finds itself in a precarious position as Microsoft attempts to shed its recent, overambitious acquisition spree.