Arkane in Jeopardy Again as Xbox Cuts Could Hit Marvel’s Blade Development
Rumors about what Microsoft might do next with its Xbox-owned studios are spreading fast, and Arkane has become one of the most discussed names. Late last month, reporting suggested Arkane was caught in a “wave of cost cuts and job losses,” with concerns growing around Marvel’s Blade. The issue, as described, is that the project is reportedly running over budget and has missed internal milestones, putting the team’s future in jeopardy.
Key takeaways
- Arkane was flagged as being at risk amid reports of widespread Xbox cost reductions and layoffs.
- Marvel’s Blade was cited as a major concern due to budget pressure and missed internal deadlines.
- French corporate filings appeared to indicate Arkane leadership changes in late June, but a clarification later undercut that timeline.
- Other Xbox first-party studios are also reportedly facing uncertainty, including talk of Obsidian Entertainment and Rare.
- Microsoft leadership dynamics are reportedly contributing to internal pressure on mid-sized teams.
Arkane’s leadership rumor doesn’t change the underlying concern
For a brief moment, there was a potential twist. New French corporate registry filings surfaced this weekend, and they appeared to show Indiana Jones and the Great Circle game director and MachineGames studio director Jerk Gustafsson stepping in as president of Arkane on June 30. That discovery looked like it might explain why Arkane’s situation was being discussed, or at least suggest a shift in oversight.
That hope didn’t last. Bloomberg reporter Jason Schreier later clarified in a Reddit thread that Gustafsson actually took over leadership of both Arkane and MachineGames back in the summer of 2025—meaning it happened well before the Xbox management shake-ups described in the recent reporting. With that correction, the earlier concerns remain in place, and Arkane is still considered vulnerable.
Why the bigger Xbox picture is still hard to pin down
Even with leadership details clarified, the overall situation is still murky because Xbox decisions have reportedly moved quickly—sometimes being reversed, which can lead to conflicting claims about what’s actually happening. One example came this week: it was said that Xbox was considering shutting down or selling Fallout: New Vegas developer Obsidian Entertainment.
Schreier and other reporters pushed back almost immediately, but Jeff Grubb—owner of Giant Bomb—later argued that the initial closure talk wasn’t completely baseless. His claim was that Xbox did debate closing Obsidian, but then changed course within just a few hours.
That kind of rapid flip is part of why studio rumors keep colliding with each other. Until the next round of reporting lands, it’s difficult for players and industry watchers to tell which stories reflect concrete plans and which are early drafts that get rewritten in a hurry.
Arkane isn’t the only one at risk right now
The broader takeaway from the current reporting is that any Xbox studio that isn’t tied to a major, guaranteed franchise—such as Fallout, Halo, The Elder Scrolls, or Gears of War—is now being treated as negotiable territory. Multiple reports suggest mid-sized teams are actively working with Microsoft to avoid closure.
Ninja Theory, Double Fine, Compulsion Games, and Undead Labs were all named as studios reportedly deep in discussions with the company to stay operational. Christopher Dring, Game Business co-founder, also said that “a few of the other Bethesda studios” were involved in similar conversations. Meanwhile, Patrick Garratt, co-founder of VG247, reported on Bluesky that Rare—the studio behind Sea of Thieves—is “on the block.”
Dring added more detail about internal concerns inside Xbox. He said sources close to the company worry about its direction under Asha Sharma, whose role is described as being more focused on listening to analysts, consultants, and conversations on X than on engaging with the people actually building games. Developers, as relayed by Dring, reportedly feel punished for Call of Duty underperforming last year, and that pressure is said to be landing on mid-sized studios.
The criticism goes further: the alleged expectation is that those teams should turn things around within days, even though development cycles typically span years. That mismatch between timeframes and reality is presented as one reason the studio climate feels so unstable.
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Even though the full behind-the-scenes story still isn’t completely clear, Schreier indicated that the complete picture would be revealed on Monday, July 6.
