Microsoft announced widespread layoffs across its Xbox studios beginning July 6, 2026, which could result in more than 1,000 job losses worldwide [1, 2, 3]. The cuts are part of a reset plan under new Xbox CEO Asha Sharma, who took over in February 2026 [4, 1, 2, 5].
Among the studios targeted for closure or sale is Arkane Studios in Lyon, the developer behind Dishonored, Deathloop, and Prey [4, 1, 2, 6, 7, 3, 5]. Microsoft shut down Arkane’s Austin studio in 2024 after the poorly received 2023 game Redfall, which saw minimal sales [4, 7, 5]. Other studios reportedly affected include Compulsion Games, Ninja Theory, Double Fine, and Undead Labs [1, 2, 6, 7, 3, 5].
Marvel’s Blade, a superhero game by Arkane planned for a late 2026 release, has been delayed internally to late 2027 and is reported to be over budget. Microsoft is considering canceling the game as part of cost-cutting measures [4, 1, 2, 6, 3, 5]. The title was first announced in December 2023, but no gameplay has been revealed since the announcement [4, 6].
Bethesda Game Studios head Todd Howard praised Arkane’s work on Deathloop during a visit in May 2026, stating, “the folks at Arkane [Studios] are doing a really, really great job” [6]. Still, Arkane Lyon co-creative director Dinga Bakaba spoke out about the layoffs, calling it “absolutely terrible” and urging executives to support their artists rather than treat them as pawns in corporate decisions [5].
If the studios are sold or spun off, layoffs still may occur, with talks possibly lasting months, according to sources [2, 6, 3, 5]. Microsoft has spent over $20 billion on Xbox investments over the last five years, underscoring the scale of the operation being adjusted [4].
The layoffs officially begin on July 6, 2026, marking a major restructuring across multiple Xbox-owned game studios [1, 2, 3, 5].
