Microsoft's Xbox division has undertaken another major restructuring, spinning off five studios and cutting 1,600 jobs immediately with a further 1,600 layoffs expected over the coming financial year. While Double Fine and Compulsion are returning to independence with some Microsoft funding, and Ninja Theory and Undead Labs have been sold to undisclosed buyers, the fate of Dishonored and Marvel's Blade developer Arkane remains unresolved. This matters because it signals continued turmoil at Xbox following an aggressive acquisition spree, and leaves Arkane's remaining staff facing an uncertain future through ongoing negotiations rather than a clean outcome.

Arkane, acquired by Microsoft via its 2021 ZeniMax purchase, now consists solely of Arkane Lyon after the closure of Arkane Austin in 2024, and employed 206 staff in 2025. Because the studio is based in France, any restructuring must be negotiated with a mandatory works council (the Comité Social et Économique), giving employees more protection than their US counterparts; possible outcomes reportedly include a sale, a management buyout or closure. Reports suggest Marvel's Blade is late and over budget, while Xbox CEO Asha Sharma has emphasised refocusing on "core business" such as Fallout and Minecraft; former co-founder Raphael Colantonio floated buying Arkane back but conceded he lacks the capital, quipping that investors currently "prefer burning money on AI".