Arkane Lyon, the studio behind Dishonored and Deathloop, reportedly faces closure by November unless a new buyer is secured, following Microsoft’s ongoing organisational restructuring within Xbox. The news comes as part of wider layoffs affecting 3,200 Xbox employees announced earlier this year by Xbox CEO Asha Sharma.
Acquired by Microsoft in 2021 as part of its purchase of ZeniMax, Arkane Lyon was identified among the first-party studios potentially impacted by cuts in July. While studios like Double Fine, Undead Labs, and Compulsion Games were able to negotiate independence, Arkane Lyon’s future remains uncertain, with French labour laws mandating a three-month search for a new buyer before closure can proceed.
French Law Requires Extended Buyer Search Before Closure
According to a report by Le Monde, Microsoft informed Arkane Lyon of the studio’s potential closure on 16 July. Under French regulations, companies with over 1,000 employees must seek buyers for affected operational divisions for three months before shutting down. This search period began over the summer, with a deadline set for 13 November to find a buyer.
Failure to secure a buyer by this date would lead to the studio’s closure, putting approximately 217 jobs at risk. Union representatives have indicated that discussions around redundancies and redeployment opportunities within Microsoft are ongoing but not progressing smoothly. Multiple options for a takeover are reportedly being considered as the deadline approaches.
Uncertain Impact on Marvel’s Blade and Wider Xbox Studio Strategy
Arkane Lyon’s current project, the Marvel’s Blade game announced in 2023, has not been visibly updated since its reveal. Microsoft has stated that no announced first-party games and projects will be cancelled amidst restructuring, implying the game remains under development. However, reports suggest the project is over budget and may have been delayed internally to target a 2027 release.
Internal documents obtained by Le Monde indicate that, if closure proceeds, shutdown efforts would begin in late 2026 and continue into early 2027. Microsoft has not formally confirmed the planned closure but is said to be engaged in the required consultation process with employees and unions in France.
The studio’s fate highlights the scale of changes underway at Microsoft’s Xbox division following Sharma’s leadership, which has already resulted in multiple layoffs and ongoing cost-cutting. Future rounds of job cuts have been reported, with further impacts potentially emerging in the coming months.
