Microsoft reportedly eyeing Arkane closure and Blade game cancellation

According to The Verge, Microsoft is considering shutting down what remains of Arkane Studios and cancelling the studio's in-development Blade game. The report adds Arkane to a growing list of Xbox-owned studios facing potential closure, with acquisition by a third party also reportedly on the table.

Arkane joins Double Fine, Ninja Theory, Compulsion, and Undead Labs — the State of Decay developer — as studios reportedly caught up in Microsoft's latest round of cuts. The Blade game, a Marvel-licensed action title in development at Arkane, would be cancelled alongside any closure.

Arkane is best known for the Dishonored series and Prey, and more recently shipped Redfall in 2023 — a co-op shooter that landed to a rough critical reception and underperformed commercially. The Austin branch of Arkane led Redfall's development, while the Lyon studio has been working on Blade. Microsoft acquired Arkane as part of the Bethesda deal that closed in 2021. The broader pattern here is hard to ignore: Xbox spent years buying up studios to bolster Game Pass, and is now systematically reviewing which of those investments are worth keeping.

No official announcement has come from Microsoft or Arkane. The studio reportedly has a chance to be acquired rather than simply shut down, but nothing is confirmed. Given how quickly the Undead Labs and Double Fine reports escalated into confirmed news, the Arkane situation is worth watching closely.