As Devastating Xbox “Reset” Continues, Dishonored Studio Arkane Lyon Reportedly Has Until November to Find a New Buyer Before Closure

After being caught up in Xbox CEO Asha Sharma’s devastating layoffs and cuts earlier this year, Arkane Lyon – the beloved immersive sim studio behind titles like Dishonored and Deathloop – reportedly only has until November to find a buyer. If the search fails, it will be shut down.

Arkane Lyon was one of a number of first-party studios reportedly facing closure ahead of Xbox’s massive “reset” in July. However, when the layoffs were officially announced – confirming that 3,200 Xbox employees will eventually lose their jobs as part of the sweeping restructuring – Microsoft revealed that Psychonauts developer Double Fine, State of Decay studio Undead Labs, and South of Midnight developer Compulsion Games would go independent following negotiations.

Hellblade studio Ninja Theory is now likely to close after two acquisition deals fell through, leaving only the fate of Arkane Lyon – a studio Microsoft acquired in 2021 when it purchased ZeniMax – uncertain. At the time, Xbox said it was “beginning required consultation with its Works Council to review potential strategic options” regarding Arkane, but little has been heard since.

Now, a report by French publication Le Monde (via Google Translate) has shed additional light on the studio’s fate. Speaking to the publication, Printemps Écologique and the Video Game Workers’ Union (STJV) said Xbox management had informed Arkane Lyon it was facing closure on 16th July. As Le Monde notes, however, Microsoft’s plan was complicated by French law, which requires a company with more than 1,000 employees to spend three months seeking a new buyer for any operational arm it plans to close. Only then, if no buyer is found, can it be shut down.

According to Le Monde, the search – alongside a consultation process and negotiations regarding an employment protection plan – began this summer, and the deadline to find a buyer for the studio is imminent, ending on 13th November. If the closure occurs, 217 workers could lose their jobs.

However, a union representative told the publication that redundancy negotiations, which seemingly include efforts to get Arkane workers redeployed to other Microsoft studios, are going “badly”, and that unions are trying to buy more time in the hope of saving the studio and its jobs. Reportedly, “several forms of takeover are being considered.”

In response to the report, Microsoft did not confirm or deny Arkane’s proposed closure, but told Le Monde, “We continue to explore various options for Arkane as part of the ongoing French consultation process”. It also said it was “keeping the Social and Economic Committee and our employees informed.” Internal documents seen by the publication say “the implementation of the plan [for the total and definitive cessation of the company’s operations] is scheduled to begin at the end of 2026 and is expected to continue throughout the first quarter of 2027.”

Amid all this turmoil, it’s unclear what might happen to Arkane Lyon’s current project, Marvel’s Blade. In July, Xbox insisted “none of [its] first-party publicly announced games or projects” would be cancelled as part of Sharma’s cuts, suggesting Blade – which hasn’t been seen since its announcement in 2023 – was safe. Earlier this year, the game was rumoured to be dead, but a follow-up report from The Verge claimed that while it was “over-budget”, it was now targeting a release in 2027 after an internal delay.

Earlier this month, Sharma insisted Xbox had “started to return to growth” following the company’s sweeping cuts, but reports suggest three more rounds of layoffs are still to come, possibly starting before October is through.

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