Microsoft May Cancel Marvel's Blade and Close Arkane Lyon in July Purge
Marvel's Blade may never reach players. The Verge reports that Microsoft is seriously considering canceling the game and closing — or selling — Arkane Lyon, the French studio behind it. Layoffs are expected to begin July 6, the day after Microsoft's fiscal year closes. At least five studios are under threat in what is shaping up to be one of the largest culls in Xbox history.
The studios at risk
The Verge's Tom Warren, a reliable source on Xbox matters, names the same group of studios that have been circling the drain for weeks: Arkane Lyon, Double Fine, Ninja Theory, Compulsion Games, and Undead Labs. Each one could be sold to a new owner or shuttered outright. Even a sale likely means significant headcount cuts.
Arkane Lyon has been working on Marvel's Blade since the game was announced at The Game Awards in 2022. It entered full production only in late 2024 after years of pre-production. The project is now targeting a late 2027 release — a delay from 2026 — and its budget has already exceeded original estimates. That combination put it squarely in the crosshairs of new Xbox CEO Asha Sharma, whose mandate, per Bloomberg, is to cut more than $20 billion in ongoing investment over five years while Xbox gaming revenue continues to decline.
The Todd Howard problem
The timing here is awkward. Just weeks ago, Bethesda boss Todd Howard — Arkane's parent company — publicly praised Blade in an Entertainment Weekly interview, saying the game was definitely coming out and that Arkane was doing "a really, really good job." That kind of public endorsement from a senior executive, made at the same moment internal closure talks were reportedly underway, echoes a pattern Xbox has repeated before: Ninja Theory received similar public support before facing the axe.
PC Gamer noted the contradiction at the time. Howard's comments haven't aged well.
What happens next
No final decision has been announced. Studios could still be sold rather than closed, and a buyer stepping in would theoretically allow Blade to continue. But with the July 6 date approaching fast and Sharma under pressure to show results, the window for a rescue is narrow. Arkane Lyon built its reputation on Dishonored and Prey — losing it, and losing Blade with it, would be a significant blow to Xbox's credibility as a home for creative, single-player games.