Update 07/08/2025: Avalanche Studios has published a statement to its official website, confirming that Contraband's development has been put on pause while the game's future is reevaluated.
"Over the past several years, Avalanche Studios Group and Xbox Game Studios Publishing have collaborated on Contraband. Active development has now stopped while we evaluate the project's future. We're thankful for the excitement we've seen from the community since we announced and will give an update on what's next as soon as we can."
A report from Bloomberg also calls the game "cancelled" and in a thread on the Game File Substack, Totilo writes about the semantics as to whether it's officially cancelled, and says that "On the Xbox end, it's canceled. They're done with it," while noting that Avalanche is careful to not call out Contraband as 'canceled.'
Regardless of the semantics, as pointed out in the original article below, Contraband was due to be a very grand project, the kind that it claimed needed support from a larger partner like Xbox and Microsoft. Even though it might not yet be technically correct to call it cancelled, it's probably a safe bet that Contraband will never make it to your console or PC.
Original Story:
Microsoft has reportedly stopped development on Avalanche Studios co-op game, Contraband. According to a report from Stephen Totilo at Game File, development on the open-world co-op title, which was initially announced in 2021, has been put "on hold" following Microsoft's layoff of 9,000+ employees across the company, with cuts to Xbox's publishing division specifically impacting Contraband's development.
After Contraband was announced in 2021, we heard basically nothing about the game, at least from official channels. There were rumors that it had hit some development struggles and had been delayed into this year, and even those rumors came after speculation that it was supposed to have arrived sometime between 2023 and 2024.
When Microsoft began announcing the its layoffs from last month, cuts which ZeniMax employees called "inhumane" and "disgusting," Totilo points out that Contraband's initial announcement trailer had been set to 'Private' on the official Xbox YouTube channel, which added oxygen to the fire of speculation that it had also been cancelled alongside other projects like Perfect Dark and Everwild.
Totilo's report today shows that there are real flames to that fire, though neither Avalanche Studios nor Microsoft have officially commented on the status of Contraband.
Even though Totilo isn't exactly reporting that Contraband has been cancelled, based on how Xbox had no problem leaving behind projects that were based on established series like the aforementioned Perfect Dark reboot, or from its proven first-party teams, like cancelling Rare's Everwild and ZeniMax Online's new MMO that Phil Spencer reportedly loved so much he couldn't put it down, it feels fruitless to hold out hope for a title that was being made by an external studio on which Xbox was the publisher.
Of course, something could happen where Avalanche is able to buy the publishing rights from Xbox and finish the game solely on their own dime, but that's not exactly a common scenario for a game on the scale of Contraband.
When Contraband was announced, Avalanche Studios' chief executive officer called Xbox the partner that "made sense" for the project, specifically because of how grand the project was going to be.
"It made a lot of sense to work with Xbox on this because of the grandness of the Contraband project. It's not a concept we would pitch to every publisher."
Totilo adds that there are no more layoffs expected for the Xbox publishing division with Contraband put on hold, and hopefully Avalanche Studios is able to move beyond this project pause without losing any of its team members. We'll update you on this story if/when more information becomes available.
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