Microsoft Confirms End of Arkane Deal as French Government Steps In
Xbox CEO Asha Sharma has confirmed the company has officially ended its relationship with Arkane Studios, the team behind the Dishonored franchise, the acclaimed time-bending shooter Deathloop, and the upcoming third-person project Marvel’s Blade. In her statement, Sharma said Arkane is currently working with the French government to keep operating, but she also left the door open to uncertainty around both the studio’s future and the status of Marvel’s Blade.
Marvel’s Blade was first revealed at The Game Awards in December 2023. The game is planned as a third-person action-adventure in which players take on the role of the titular Daywalker, tasked with clearing Paris of a growing vampire infestation. After a brief note or two from the project’s director thanking players for their patience, Arkane has largely gone quiet about the game. Still, like many high-profile announcements, it hasn’t been immune to leaks and speculation. The newest wave of claims arrived last Tuesday, suggesting Xbox might be preparing to shut Arkane down—an idea that now appears to have some grounding, given Sharma’s confirmation of the split.
With any luck, Marvel’s Wolverine will keep the strengths players associate with Marvel’s Spider-Man, but Insomniac will still want to revise at least one key element.
Arkane Begins Consultations With French Authorities as Xbox Restructures
As part of broader changes at Xbox, long-rumored studio cuts have started to take shape. Sharma shared an internal message sent to Xbox staff on multiple social platforms. The email states that roughly 3,200 employees across the company will be laid off during the 2027 fiscal year, and that four studios are exiting Xbox ownership and moving under new management.
Those four studios are Compulsion Games, Double Fine, Ninja Theory, and Undead Labs.
While Compulsion and Double Fine are described as going independent, Ninja Theory and Undead Labs have already moved into arrangements with new owners. Arkane, however, appears to be in a tougher position. Sharma’s public remarks indicate Arkane is “beginning required consultation with its Works Council to review potential strategic options.”
The “Works Council” Sharma mentioned is likely the Comité Social et Économique, a French government body focused on representing employee interests. In practical terms, Arkane is now engaging directly with French officials as it tries to navigate what may be a compelled separation from Xbox. At the moment, it isn’t clear what these discussions will lead to, whether job reductions are on the table, or how the outcome could affect Marvel’s Blade. It’s also still unknown whether Disney/Marvel would step in to support the studio and its upcoming game.
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Back in July 2025, a report originating from the French government suggested Xbox had already put about 94 million euros (roughly $109 million) into Marvel’s Blade. That claim surfaced only a few days after another rumor that said the game didn’t reach full production until 2024. Even with those alleged development complications hovering in the background, Bethesda executive Todd Howard recently praised Arkane’s work, saying the studio is doing a “really, really great job” in an Entertainment Weekly interview from last month.
