Microsoft Plans to Close at Least Five Xbox Studios, Cancel Marvel's Blade in Sweeping Layoff Round

Microsoft is weighing the closure of at least five Xbox game studios — including Arkane Studios, the France-based developer behind the forthcoming Marvel's Blade — as part of a wave of cost cuts and job losses planned for its Xbox gaming division, according to The Verge, which cited sources familiar with the company's plans. An announcement is expected next week.

Scope of the Cuts

The restructuring, as described to The Verge, goes beyond headcount reduction. Sources indicate the coming actions will result in studio closures or spinoffs, potential mergers between studios, and the cancellation of games in development. The breadth of the moves signals a structural recalibration of Microsoft's gaming unit rather than a routine staffing adjustment.

At the center of the reported cancellations is Marvel's Blade, a title in development at Arkane Studios. Microsoft is said to be actively weighing dropping the project as part of the broader cost reduction effort.

Arkane Studios in the Crosshairs

Arkane Studios, headquartered in France, carries an established pedigree inside Microsoft's gaming portfolio. The studio is best known for the Dishonored series. Its current project, Marvel's Blade — built around the Marvel Comics vampire hunter — had not yet reached release before becoming a candidate for cancellation under the reported plan.

The potential closure of Arkane would mark a significant rollback of assets Microsoft accumulated through its acquisition of ZeniMax Media, the parent company under which Arkane operated.

What Comes Next

Microsoft has not confirmed the reported plans. The Verge's sourcing points to a formal announcement arriving next week, at which point the full scope of studio closures, mergers, and canceled titles is expected to become public. Until then, the number of jobs at risk and the final list of affected studios remain unconfirmed.

For investors tracking Microsoft's gaming segment, the reported moves suggest the company is prioritizing margin discipline over studio count — a posture that has been building across the broader games industry as production costs have escalated and consumer spending has softened.