Xbox Reportedly Weighing to Cancel Blade and Close Arkane - News
by William D'Angelo , posted on 01 July 2026 / 1,999 Views
First-party Xbox developer Arkane, best known for developing the Dishonored series, is reportedly facing closure, according to sources familiar with Microsoft's plans that spoke with The Verge.
Arkane announced Marvel's Blade in December 2023. The sources claim Microsoft wants to cancel the game as a way of cost cutting. It is also claimed the internal release date has slipped until late 2027 and it is running over budget.
The sources are also claiming Microsoft is weighing closing at least five studios at Xbox. All the studios, if the reports are true, are looking for a buyer or a way to buy out their independence.
Bloomberg's Jason Schreier previously reported Ninja Theory, Double Fine, and Compulsion Games were all facing potential closure and were in talks with Microsoft to go independent. GameBeat's Dean Takahashi this week reported State of Decay 3 developer Undead Labs is in the mix of possibly being shut down.
The sources are stating the layoffs will start on July 6th and will hit most parts of Xbox.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.
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Initial good vibes from the new leadership sure have quickly turned sour. I don't like the reports of the other supposed closures either, but Arkane seems to make games I would enjoy more, so this hurts more for me personally.
Microsoft hates games and developers it seems.
Do you say the same about Playstation, who have closed 8 studios so far this generation, and have cancelled at least as many games according to leaks?
The gaming industry is in an incredibly volatile place right now, most gaming studios and publishers grew too much during the Covid lockdown caused gaming spending spike, which quickly fell off once people returned to normal life. We have AI driving up console prices through RAM and SSD shortages, leading to price hikes in accordance with the law of supply and demand, and those higher prices on those parts are leading to higher console prices and lower console sales, and by extension, less game sales. Studies and revenue figures are seeing gaming time and gaming spend increasingly shifting toward the largest live service games and away from buying brand new singleplayer games at full price. Gaming companies everywhere right now are scrambling to "cut the fat" and get their operation costs more in line with their revenue. We've been seeing waves of layoffs and studio closures in the gaming industry for like 4 years straight now.
When Asha Sharma took over Xbox earlier this year, she entered to find that Xbox was going to fall to a mere 3% profit margin in the quarter ending today, and into the red, a loss of money, by the Holiday quarter later this year. What she is doing is to prevent that. Layoffs and closures are never fun, but she was brought in to right the ship and keep Xbox profitable, and continuing to keep open studios that are losing money is just not the way to do that. Arkane for instance has had 3 underperforming games in a row now, Deathloop, Wolfenstein Youngblood, and Dishonored: Death of the Outsider. It's also looking like the gap between Deathloop's release and Blade's release was going to be in the neighborhood of 7 years, leading to a high budget and unlikely profit turn, considering we've heard Disney charges as much as a 18% cut of the revenue for licensed games sometimes.
Both MS and Sony seem to hate the people working for them. MS might have a small console userbase but has a well established much larger pc userbase. PlayStation is userbase also isn't small. The problem isn't game sakes, the problem is that game sales are not growing and budgets are out of control. Mostly because they think 200 million game will sell 2.5 times as well as a 100 million game, which probably could have been made faster too.
Xbox, as always, has a lot more to prove than sony, when it comes to games
Xbox are the kings of slamming their dick in the door since 2013 and Sony is drowning in a 1 inch deep rain puddle. They're both ran by buffoons.
This is an Xbox article. All companies who make staff redundant are dicks.
For the players
It would be 10 years too late at this point but I would have lived to see a Dishonored game that continued on from High Chaos ending from the first game.
What the f happened to the 'Let Us Cook' tweet?
Its amazing how the people that said Xbox needs to trim the fat and focus on games people want to play...
Are the same people "get mad" when they close studios that keep making games no one plays
There is no world where Xbox can survive without laying off nearly half their staff
Surprise surprise , I had a feeling arkane was on the death row too
Whether movie or game, Blade seems cursed.
The MCU Phase 6 movie being cancelled honestly probably factored into this decision, Xbox were likely hoping for some co-marketing with the movie.
Like the expression goes... “There’s only been one Blade. There will only ever be one Blade.”
Cancel it before you have to pay Disney large sums for using the character for little profit? Arkane's place seems dubious but wonder if they can survive by splintering and then changing what they've made into their own thing.
Blade would have been my most anticipated exclusive..
