Microsoft has confirmed sweeping layoffs across its Xbox division, cutting thousands of jobs, shedding four studios and directing remaining teams towards established franchises as part of a "reset" led by new Xbox leader Asha Sharma. Amid this upheaval, the fate of French developer Arkane Lyon and its in-development title Marvel's Blade remains unresolved, with the studio confirmed only to be undergoing a "consultation" process. This matters because Arkane is a respected developer behind acclaimed games such as Dishonored, and uncertainty over its future has stirred concern among fans and industry figures alike.

Arkane Lyon's distinct path is likely tied to French labour laws, which require "consultation" with a regional Works Council and a "review of potential strategic options", leaving open whether Xbox will keep, sell or close the studio, as it did with sister studio Arkane Austin in 2024. Microsoft has stated that no publicly announced first-party projects are being cancelled, suggesting Marvel's Blade will survive, though The Verge reports it was already over budget and internally delayed from 2026 to 2027, with no public release date. Announced in 2023, the game casts Eric Cross Brookes (Blade) in a quarantined, supernatural-emergency Paris; it only entered full production in late 2024, and Bethesda's Todd Howard said he was impressed after seeing it on 21st May.