Beloved Game Studio’s Future Looks Grim After Xbox Walks Away

In July, Microsoft announced a “reset” for Xbox, a euphemism for the more than 3,000 layoffs it plans to make at Xbox between July 2026 and 2027. Those layoffs included a couple of studios being forced to go independent, but the fate of others was unclear. Microsoft told Dishonored and Marvel’s Blade developer Arkane Studios’ management on July 16 that it intended to close the studio. But because Arkane is based in Lyon, France, Xbox has had to adhere to French labor laws and therefore could not close Arkane right away.

Instead, Microsoft and Arkane entered into a three-month consultation period where Microsoft was mandated to find a buyer for Arkane while consulting and negotiating a job protection plan for affected employees. According to a new report from the French outlet Le Monde, Arkane has until Nov. 13 to be purchased.

“Negotiations on the redundancy plan are going badly,” a Printemps Écologique (Ecological Spring) union representative, called Simon in the report, told Le Monde.

Along with the French Video Game Workers’ Union (STJV), the unions are trying to extend the deadline for the redundancy plan negotiations and the search for a buyer. “Several forms of takeover are being considered,” union representative Simon said.

The future of Arkane

A Printemps Écologique union representative wants negotiations to include measures that “enable the re-employment” of employees who get laid off. “The redundancy plan must be adapted to the video game market where, currently, the prospects for returning to work are extremely limited,” he said.

“How can this be justified when Microsoft’s annual net profits are in the hundreds of billions of dollars?” the French Video Game Workers’ Union wondered. Simon said, “We are collateral victims of Xbox’s change in strategy.” According to him, Arkane’s next game, Marvel’s Blade, is “nearing the end of production.”

Marvel’s Blade was announced almost three years ago at the 2023 The Game Awards. Arkane has been quiet about it since, and it was internally delayed until late 2027. With Arkane possibly shutting down in the near future, it’s possible the game never sees the light of day.

The unions fighting for Arkane haven’t ruled out taking Microsoft to court to challenge its economic justification for wanting to close Arkane. “This is in complete contradiction with what we’ve been told in the Works Council for years about the company’s financial situation,” union rep Simon said. “Microsoft is looking to divest itself of Arkane, even though the studio is doing well, in order to save money and improve the profitability of its short-term investments.”

Arkane could still be saved

Arkane’s future is in doubt, but there may be light at the end of the tunnel yet as hope remains that Arkane won’t be shut down. “My understanding is that there are multiple paths actively being explored that would save Arkane Lyon,” Bloomberg reporter Jason Schreier said on Friday. “Anything can happen during negotiations, but at this point I’d be surprised if the studio is shut down.”

If the Nov. 13 deadline passes without Microsoft and Arkane finding a new buyer, it’s possible Arkane could be shuttered. However, other studios previously owned by Microsoft were able to regain their independence, like South of Midnight developer Compulsion Games, so it’s possible that’s one of the “multiple paths” Schreier alluded to. Going independent may still mean layoffs could hit Arkane; Double Fine laid off about two dozen employees after it secured its independence.