Microsoft Reportedly Plans Major Xbox Studio Restructuring, Blade Game Faces Cancellation

Microsoft's gaming division, Xbox, is reportedly preparing a major restructuring that could deliver a significant blow to video game enthusiasts. As part of a large-scale round of layoffs expected to begin on July 6, the company is considering shutting down the renowned Arkane Studios and canceling the highly anticipated Marvel's Blade, which has been in development since 2023.

The information was revealed in an exclusive report by international technology news outlet The Verge.

Five Studios Reportedly Under Review

Citing multiple sources familiar with the matter, the report claims that Microsoft is preparing to either close or sell at least five game studios under its ownership next week. The studios reportedly under consideration include: Compulsion Games, Double Fine Productions, Ninja Theory, Undead Labs, Arkane Studios

Blade Development Faces Uncertain Future

The canceled project under consideration is based on Blade, one of Marvel's iconic characters.

The game has received no major public updates over the past two years. According to internal sources cited by the report, development costs have significantly exceeded the original budget, while production delays have continued to mount.

As a result, Xbox is reportedly exploring the possibility of selling Arkane and several other studios to suitable buyers.

Leadership Signals Strategic Shift

In a recent joint message to employees, Xbox Chief Executive Officer Asha Sharma and Chief Content Officer Matt Booty warned that the gaming division had expanded beyond sustainable limits.

"We have stretched ourselves far beyond our capacity. This is not sustainable for the future."

Following the announcement, Xbox employee unions expressed strong frustration with Microsoft's leadership and called for greater transparency throughout the restructuring and layoff process.

Arkane's Legacy

Arkane Studios is widely respected among gamers for developing critically acclaimed first-person stealth titles such as Dishonored and Deathloop.

Microsoft previously shut down Arkane Austin, one of Arkane's sister studios, during another round of layoffs in 2024.

Continued Industry-Wide Layoffs

Microsoft acquired Activision Blizzard in 2023 for $69 billion, the largest acquisition in video game industry history.

Since then, the gaming industry has experienced continuous workforce reductions. Approximately 14,600 employees lost their jobs across the sector during 2024. By mid-2025, Microsoft had already eliminated around 9,000 positions across various divisions.

Industry observers warn that the latest restructuring planned for 2026 could trigger another major wave of disruption throughout the global gaming industry.

//DBTech/BMT/OR//