It looks like Team Green’s era of aggressive expansion is officially over. The significant July layoffs we previously reported on have now been confirmed by Microsoft. The company announced it is cutting around 4,800 jobs, or roughly 2.1% of its global workforce — and the Halo maker seems to be bearing the brunt of it. CEO Asha Sharma described the move as its ‘most significant restructure’ as two-thirds of those layoffs are coming from the company’s gaming division. What’s more, a report claims that the long-awaited Marvel’s Blade project has gone over budget and XBOX could cancel it altogether.
“We are beginning the most significant restructure in XBOX history. After careful consideration, I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27,” says Sharma in the company’s memo. “This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management.”
As part of the reorganization, the company is letting go of Compulsion Games and Double Fine Productions to become independent studios again. Meanwhile, Ninja Theory and Undead Labs are set to move under new ownership with funding to complete the recently revealed Senua and State of Decay 3, respectively. Still, she stressed that none of its publicly announced first-party XBOX games have been canceled as part of the restructuring.
The announcement also shed some light on the future of Arkane Studios, the developer behind Dishonored that’s currently working on Marvel’s Blade. The memo mentioned that the studio has entered a legally required consultation process in France with its Works Council to review ‘potential strategic options.’ However, a report from The Verge’s Tom Warren paints a much more uncertain future for the vampire hunter adaptation.
According to Warren, Blade‘s development has missed its expected 2026 release, been moved to late 2027, and gone over budget. He also claims there are talks of canceling the game as part of broader cost-cutting measures while simultaneously exploring options to sell Arkane. Adding to the uncertainty, Warren further said that Microsoft is weighing the closure of at least five studios, with Bethesda being among the hardest-hit by additional layoffs.
“We are also making reductions across other units, and in some cases, shifting investment to focus on higher priority projects. These changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios,” said Sharma.
Sharma ended the memo by saying the restructuring is designed to simplify and streamline XBOX’s operations. The company plans to work with a ‘cleaner code base, shared services, and 50% reduced vendor spend.’ While also introducing a Chief Operating Officer to oversee all content, hardware, platform, and services under a single model for the first time.
Whether Blade survives XBOX’s latest shake-up remains to be seen. But after nearly three years of silence, fans likely just want an update — good or bad.
