A new report claims that Microsoft is considering cancelling the upcoming Marvel's Blade game and closing its developer.

According to The Verge, Microsoft is considering closing at least five studios, one of which is Arkane, the developer of the upcoming Blade game. The report said Blade was originally set to launch in 2026, but was delayed to late 2027 and is over budget.

Earlier in June, a report said Marvel's Blade was not canceled, despite it being a no-show at the Xbox Games Showcase. The game was announced in 2023, but no gameplay footage has ever been released.

https://www.youtube.com/watch?v=basLDO2bj2k

Microsoft is also said to be exploring the possibility of selling Arkane Studios, though The Verge's report did not name any potential buyers. This reporting follows previous stories that said Microsoft is also trying to offload Compulsion Games, Double Fine, Ninja Theory, and Undead Labs.

"If buyers are found for these studios, then they’ll avoid being closed, but sources stress these talks could take months in some cases," The Verge said.

Marvel's Blade is in development at Arkane's office in Lyon, France. The company's US-based counterpart in Austin, Texas--the studio that made Redfall--was shuttered in May 2024. Microsoft acquired the Arkane teams as part of its buyout of parent company ZeniMax years prior.

Layoffs could begin July 6

The report also included more information on the job cuts coming to Xbox, saying they will begin on July 6 and "hit most parts of Xbox." Unconfirmed reporting from other sources said the layoffs could be as many as 1,000. If the five studios are shuttered, that would amount to at least 500 employees, The Verge said.

This is happening as part of Xbox CEO Asha Sharma's plan to "reset" the Xbox business with the aim of making it the "No. 1 gaming and entertainment company."