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[BUSINESS] · United States, France · 64 sources

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Microsoft's Xbox Reset Puts Arkane Lyon and Marvel's Blade at Risk

Microsoft is executing a sweeping “Xbox reset,” revising its gaming division’s strategy and budget after years of heavy investment. Internal memos from Xbox CEO Asha Sharma reveal that the company plans to cut costs by closing, selling, or spinning off at least five first‑party studios. The studios identified by multiple reports – The Verge, Bloomberg and GamesBeat – are Arkane Lyon (developer of the delayed Marvel’s Blade), Compulsion Games, Double Fine, Ninja Theory and Undead Labs, the studio behind State of Decay 3.

Blade, announced in 2023, has been pushed back internally to late 2027 and is reportedly over budget, prompting rumors that Microsoft may cancel the title. Undead Labs faces a similar fate, with its upcoming State of Decay 3 jeopardised if the studio is shuttered. The restructuring also anticipates a large lay‑off wave of over a thousand Xbox employees after Microsoft’s fiscal year ends, with unions such as the Communications Workers of America publicly demanding transparency and job‑security guarantees. No official confirmation has been issued, but the convergence of sources indicates a significant shift in Microsoft’s first‑party game development portfolio.

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