Microsoft is reportedly cutting fewer than 2.5% of its global workforce, according to reports from Business Insider and RTE.ie. Simultaneously, industry reports from The Verge and IGN indicate the company is weighing the closure of Arkane Austin and the cancellation of its Marvel’s Blade project as part of a broader restructuring within its gaming division.
How many Microsoft employees are affected by the cuts?
Microsoft plans to eliminate thousands of positions, though the total impact represents less than 2.5% of its overall workforce, according to reports from Business Insider and RTE.ie. The company hasn’t provided a specific headcount for the reductions, but the percentage suggests a targeted approach rather than the massive, sweeping layoffs seen across the broader tech sector over the last 18 months.
Which Xbox studios and games are facing cancellation?
Reports from The Verge and IGN indicate that Microsoft is considering shutting down Arkane Austin, a studio known for the Dishonored and Prey series. As part of this potential closure, the company is reportedly weighing the cancellation of Marvel’s Blade, an action-adventure game currently in development at the studio.
The instability extends beyond Arkane. Windows Central reports that State of Decay 3 could also face cancellation. This comes despite the game having trailers and an alpha build, suggesting the project was well into development before the current review process began.
Why is Microsoft restructuring its gaming division?
The reported cuts follow Microsoft’s massive acquisition of Activision Blizzard, a deal that significantly expanded the company’s gaming footprint but also created redundancies across its studio network. According to reporting from The Verge, the company is currently evaluating the efficiency of its various internal teams to align with its long-term strategy for Xbox and Game Pass.
This move mirrors a wider trend in the gaming industry. Throughout 2023 and 2024, major publishers including Sony and EA have cut thousands of jobs to reduce overhead following the hiring surges that occurred during the pandemic.
Comparing the reported impacts
While the workforce reductions are being framed as a small percentage of the total company, the impact on the gaming division appears more concentrated. The following table contrasts the reported status of the affected projects and studios:
| Entity/Project | Reported Status | Source |
|---|---|---|
| Global Workforce | Under 2.5% cut | Business Insider / RTE.ie |
| Arkane Austin | Considering shutdown | The Verge / IGN |
| Marvel’s Blade | Considering cancellation | The Verge / IGN |
| State of Decay 3 | Potential cancellation | Windows Central |
What happens next for Xbox developers?
Microsoft has not officially confirmed the closure of Arkane Austin or the cancellation of Marvel’s Blade. Typically, when Microsoft shutters studios—as it did with Tango Gameworks and Arkane Lyon’s sister studios in previous cycles—it provides a transition period for employees or attempts to relocate key staff to other internal projects.
Industry analysts suggest that the focus for Xbox is shifting toward higher-margin titles and tighter integration with its subscription services. Whether these specific projects survive the review process depends on their projected return on investment relative to the cost of maintaining the studios.