Microsoft is considering shutting down Arkane Lyon and canceling the Blade game.

The leadership under the new executive director, Asha Sharma, has set off a definite red alert in the offices of the tech giant. The head of the gaming division has been stating repeatedly in internal meetings that the financial health of the business is not doing well at all, justifying an unprecedented cut in the company’s portfolio. It is estimated that the initial round of scissors will immediately eliminate around 500 jobs just with the closure of the main studios, paving the way for a mass layoff that is expected to cut at least 1,000 professionals from the brand starting July 6, 2026.

This bulldozing approach over established teams destroys the confidence of the public and the developers themselves, who are now desperately updating their portfolios due to leadership’s planning errors. Behind the scenes at the Compulsion Games studio, currently focused on producing South of Midnight, the atmosphere is somber, with employees already searching for new job opportunities in light of the impending layoff. The same dismal scenario repeats at Ninja Theory, where the British team received formal notifications that the operation will be dismantled or completely shut down in the coming weeks.

The most shocking point of an exclusive report released by the portal The Verge reveals the decision to pull the plug on the development of Marvel’s Blade. The project, based on the vampire hunter from the comics publisher, was struggling with chronic scope issues and a blown budget. Originally planned to hit stores later this season, the internal timeline had been pushed to late 2027, which seems to have exhausted the patience of the financial executives. As a result, the activities of the renowned French studio Arkane Lyon will be completely terminated. Canceling a project of a world-renowned hero by a studio of this caliber is a testament to the incompetence of a management that seems clueless about what to do with the talent it possesses.

In a bid to mitigate the complete destruction of its ecosystem, the platform owner is scrambling backstage to find buyers interested in taking over the contractual rights of Compulsion Games, as well as Double Fine, Ninja Theory, and Undead Labs. If an investor decides to close the deal, these studios will change ownership instead of being shuttered. This drastic restructuring paints a rather grim future for the console ecosystem, which prefers to cannibalize its creative fronts rather than admitting that the rigid business model adopted by the board has failed.