90%
Highly Likely
The entire video game industry is in a tense state this week. After Bloomberg reported that Xbox planned massive layoffs following the close of its current fiscal year (which ends today, June 30), we've seen multiple reports suggest that this could be one of the worst mass layoffs the industry has seen in recent years. A high bar to hit, but one that Xbox seems poised to clear. Now, as we're surely only hours away from official confirmation of the cuts, a new report suggests that the layoffs could involve shuttering "at least five studios," including Arkane Lyon, which would also see Marvel's Blade officially cancelled.
The latest report comes from The Verge, claiming that "Microsoft is currently weighing closing at least five studios, including the developers behind Marvel's Blade." The report adds that the game was initially meant to debut at some point this year, though its internal release window had fallen into 2027, and to make matters worse, it's over budget.
Though cancelling Marvel's Blade and shuttering Arkane are on the table, they're thankfully not the only options Microsoft is considering. The report adds that, similar to other studios like Double Fine, Compulsion Games, and Ninja Theory, selling Arkane Lyon is an option that is being explored rather than just shutting the studio down entirely. This also comes shortly after reports that Undead Labs, the team behind State of Decay, is being shopped around, lest it also get shuttered.
While it may seem helpful that the option to sell or spin off these studios is there, those are only positive solutions if the studios can successfully buy their own independence, as Toys For Bob did, or if there's someone willing to purchase them, as KRAFTON was when Microsoft shuttered Tango Gameworks.
Those two instances are the exception, not the rule, when it comes to how these types of deals go. The simple truth is that there aren't a lot of companies in the industry capable of acquiring studios like Arkane Lyon, Compulsion, Double Fine, Undead Labs, or Ninja Theory. It is still a very real possibility that all five of those studios are shuttered before the end of the week.
If that were to happen, the loss to the industry would be immeasurable, just as every major loss we've seen in the last four years has been. And the closures won't be the end of it, as those studios 'lucky' enough to make it to the other side of these closures will still lose developers through layoffs.
Though the developers working at Microsoft can't stop the layoffs, they can, and are, making their voices heard and fighting back through the CWA. More than 3,500 workers at Xbox have unionized under the CWA, and in a press conference yesterday, those unionized workers made it clear they are prepared to fight back against the layoffs. Demanding that Microsoft come to the bargaining table so that workers can have proper layoff protections that ensure these kinds of cuts are only used as the last resort they are.
About the author: David has been writing about videogames, technology, and culture since 2020, with a focus on reporting daily news across multiple publications, including GameDaily.Biz, GameSkinny, and PlayStation Universe before joining Wccftech in 2025. David started contributing as Canada/US reporter for Wccftech's gaming section in 2025. Besides being up-to-date on the industry's movements, he loves interviewing developers, reviewing games, and writing intricate essays about the symbolism and layered meanings to be found in rich narratives as he's done for publications like GamesIndustry.Biz, LostInCult, and others. Outside of games he loves movies, music, theatre, his hometown, and his family, though not necessarily in that order.
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