Xbox Reshuffle Fuels Uncertainty for Marvel’s Blade as Arkane Lyon Faces Change
Microsoft’s plans for the future of Marvel’s Blade are still a mystery, even as the company moves to sell or wind down Arkane Lyon as part of a broader reshuffle at Xbox.
Arkane Lyon review begins under French labor rules
Xbox CEO Asha Sharma said today that Arkane Lyon’s leadership is starting a required consultation process with the studio’s Works Council. The goal is to examine possible strategic paths for the French developer, which means that any decision involving a sale or closure has to follow local labor law. Because this kind of consultation can take time, the studio—and whatever it’s building—may not see clarity right away.
That uncertainty also hangs over Marvel’s Blade, which has been in development at Arkane Lyon. At the moment, it’s unclear whether the game will ever reach a release, whether it has been shelved, or whether another company could step in and continue the project with Arkane Lyon still involved.
Microsoft has not added any further details to Sharma’s comments. Marvel Games also did not provide additional information when asked for a response.
Development timeline and silence since the reveal
Reports have suggested Marvel’s Blade was pushed internally to late 2027 and was also running over budget. That timing has been treated as credible in follow-up discussion, but neither Microsoft nor Marvel has officially pointed to a release window.
The game was revealed in December 2023 with a trailer, and since that showing, there hasn’t been much public movement. Blade comes from the team behind Deathloop, which is part of why fans have been watching for any follow-up updates.
Todd Howard previously shared that he had recently seen what Arkane Lyon is working on and said he was impressed. Howard’s quote included a tease that he wasn’t in a position to say when more would be shown, but that he had looked at something just days earlier (May 21). He also praised Arkane’s work, saying the developers are doing “a really, really great job.”
Still, the anxiety ramped up after Blade failed to appear at last month’s Xbox Games Showcase, leaving players with even fewer concrete signs about the project’s status.
Xbox layoffs coincide with the Arkane review
- Microsoft announced that 3,200 Xbox employees are expected to be laid off during the current financial year.
- Of those job cuts, 1,600 layoffs were scheduled to happen today, July 6.
- In an email to staff, Sharma described the move as the most “significant” restructure in Xbox history.
- Sharma also argued that Microsoft’s gaming division “is not healthy,” framing the changes as part of a push for growth.
- Overall, Xbox is reportedly cutting roughly one-fifth of its workforce as part of this effort.
What happens to other studios and major franchises
Alongside the workforce reductions, Microsoft outlined changes for several studios tied to Xbox’s broader portfolio.
Sharma said Compulsion Games (the team behind South of Midnight) and Double Fine Productions (the team behind Psychonauts) will return to management and shift into independent studios. The plan keeps their intellectual property and catalogs, while also giving them “runway for their next games.” She noted that Double Fine’s case means Microsoft will retain the Psychonauts IP.
Those future projects are currently unannounced.
Microsoft also said Ninja Theory (behind Hellblade) and Undead Labs (behind State of Decay) “have entered terms to join new ownership,” with added funding intended to complete and grow Senua and State of Decay 3. That language points to eventual releases, but the company did not name who the new owners would be.
Elsewhere, layoffs are reportedly happening across other Xbox segments, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios. Microsoft maintained that none of its first-party games or projects that have already been publicly announced are being cancelled due to the job cuts.
If that assurance holds, it implies projects such as Fable, Gears of War: E-Day, Clockwork Revolution, Call of Duty: Modern Warfare 4, Minecraft Dungeons 2, and The Elder Scrolls 6 remain on track.
More updates are expected as the situation develops, with additional coverage planned as today’s announcements continue to land.
