Xbox's "Continuing Our Reset" Memo Puts Arkane Lyon on a Year-End Clock
Arkane gets a single sentence in the memo, and that sentence commits Microsoft to nothing. The memo does not announce a closure, a sale, a management buyout, continued ownership or the cancellation of Marvel's Blade. It sets a timeline and nothing more. Several outlets reported the same reading, including MobileSyrup, which wrote that Xbox also expects consultations with Arkane to continue through the end of the year. TheWinCentral put the end date at the end of 2026.
The consultation is not new. Pure Xbox reports that during the July job cuts, Arkane was already part of the consultation process (GamesBeat's wording), and that Arkane began talks with the French Works Council at that time to review strategic options. A works council is the elected employee body that French companies must consult before major restructuring. That legal step is the likely reason Arkane's timeline differs from the US and UK studios, although this is our inference and Microsoft has not said so. GamesBeat made a related point, writing that a management buyout seems a management buyout is not a solution for that studio either — though given it's based in France, the process could be different according to French laws. GamesBeat framed that as analysis, not reporting.
There is also a difference in wording between Arkane and Ninja Theory. For Ninja Theory, Xbox named the outcome it is consulting on: a proposed closure. For Arkane, it named no outcome. Some outlets have treated the two cases as the same. Game Informer, for example, wrote that Arkane is in a similar position, though Booty says those consultations are expected to last "through the end of the year." Microsoft's own text does not go that far.
The 268 Xbox Job Cuts and Studio Mergers Around Arkane
Arkane's status makes more sense against the rest of the memo. Booty opened with 268 roles across Halo Studios, other first-party studios, and the XGS management and central functions layer being eliminated, and said the actions completed since July, inclusive of the studio divestitures, bring us roughly three-quarters of the way through previously announced restructuring.
The earlier plan is the reference point. According to MobileSyrup, the new round of layoffs and restructuring comes as part of the 3,200 total cuts Xbox detailed back in July. At the time, Xbox said it was cutting 1,600 employees immediately and another 1,600 over the next 12 months. With Booty describing the reset as roughly three-quarters done, about a quarter of it is still to come. Arkane's unresolved consultation is one of the open items in that remaining quarter.
The second part of the memo reorganizes the portfolio. Booty said the goal is to strengthen our franchises and games by operating fewer business units, aligning groups that already work closely together, and focusing our publishing expertise. The changes are:
| Publishing label | What it absorbs or gains |
|---|---|
| Activision | World's Edge and Rare, plus development of the next Halo by a new team separate from Call of Duty |
| Halo Studios | Reduced to a small team supporting in-market Halo games |
| Bethesda | Obsidian, including Grounded and a new Fallout project with Bethesda Game Studios |
| King | Microsoft Casual Games |
| Playground + Turn 10 | Merged into one studio focused on Forza and Fable |
The Halo move is the largest. Booty wrote that Activision will also be developing the next Halo title, led by a new, purpose-built team that is separate from ongoing development and plans for Call of Duty. Arkane has belonged to Bethesda since Microsoft acquired ZeniMax. Bethesda gained Obsidian in this reshuffle, but the memo says nothing about Arkane staying in Bethesda's lineup.
Compulsion, Double Fine and Undead Labs Show What a Clean Xbox Divestiture Looks Like
Booty's update on the studios listed as at risk in July shows the range of outcomes Arkane could face. The successful cases follow the same pattern: In August, Compulsion and Double Fine returned to management with their IP, back catalogs, and runway funding. Then Undead Labs has now successfully transitioned on similar terms and, with a new publisher, will release State of Decay 3 day one on Game Pass.
That tells us how Xbox has been handling divestitures in practice. The departing studio keeps its own intellectual property and older games, and gets transitional funding (the runway) to operate independently. In the Undead Labs case, Game Pass access to the studio's next game was also kept. Game Informer reports that Undead Labs has a deal with a new publisher, but will still release State of Decay 3 on Game Pass when it launches next year.
Arkane does not fit that pattern cleanly. Compulsion, Double Fine and Undead Labs owned the franchises they were building. Marvel's Blade uses a character licensed from Marvel, so any spinout that includes the game would presumably involve Marvel and not only Microsoft and Arkane's managers. That is our inference from the licensing arrangement. No outlet has reported the status of those negotiations, and the memo does not say whether Arkane is being offered the same terms as the other three.
Ninja Theory's Failed Sales Show the Worst Case for Arkane
Ninja Theory's case shows how a divestiture attempt can fail. Booty wrote: Unfortunately, two separate agreements for Ninja Theory fell through. We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward.
The Hellblade studio's path matters for Arkane because it shows that a sale process can collapse partway through. A proposed closure followed only after two deals had failed. Xbox has also left an opening even now, saying it will keep looking for alternatives during the closure consultation. GamesBeat said Arkane's position did not look good either, writing that things do not look so rosy for Ninja Theory and Arkane.
The memo, though, places Arkane at an earlier stage. Ninja Theory is now consulting on a named outcome. Arkane is still in a consultation that started in July and has no announced destination. Whether that means a buyer is being sought, a deal is being negotiated, or the French process simply takes longer, Microsoft has not said.
Marvel's Blade Has an Announcement, a Compliment and a Cancellation Report
Marvel's Blade is the project that decides how people read Arkane's situation, and the public record on it is sparse. Bethesda and Marvel Games announced it on December 7, 2023, as a mature, single-player, third-person game from Arkane Lyon. At the time, Bethesda said Arkane Lyon had just started development. The announcement described an original story set in a quarantined part of Paris during a supernatural emergency, with vampires driving residents indoors at night. It gave no platforms, release window or production milestones. Nothing official released since then has added those details.
Two later reports point in opposite directions, and both come through Pure Xbox's summary. First, Pure Xbox says Bethesda head Todd Howard told Entertainment Weekly in May 2026 that he "saw some stuff just yesterday and the folks at Arkane are doing a really, really great job." Days later, according to Pure Xbox, The Verge reported that "Microsoft wants to cancel Blade as part of a wave of cost cuts and job losses." Microsoft has not officially confirmed the reported cancellation plan. Howard's comment shows that someone at Bethesda was reviewing active work in May, but it says nothing about where the project stood by September.
Pure Xbox concluded that Blade is believed to still be in full development at Arkane Lyon, and noted that Arkane's public line remains "Let us cook." That is Pure Xbox's view and Arkane's own public messaging. The September 22 memo does not mention Blade. It has not been officially cancelled, officially confirmed as continuing under Xbox, or reported as moving to another publisher.
What the Arkane Consultation Means for Game Pass Subscribers and Xbox Players
If you are waiting on Marvel's Blade, you should expect no official answer before the end of 2026, and you should set aside any rumor claiming a final outcome until Microsoft or Arkane confirms it. The next scheduled event is internal. Booty wrote that at the October 6 town hall, employees will reflect on the restructuring and look ahead to what Xbox describes as one of the strongest game lineups in its history (in TheWinCentral's paraphrase). The memo does not promise any news about Arkane at that meeting.
Game Pass subscribers also have some evidence to go on. The Undead Labs deal shows that Microsoft has negotiated Game Pass launch access for at least one divested studio's next game. It does not tell us anything about Arkane's back catalog or future releases, because no terms have been announced for Arkane.
- Xbox's September 22 memo says Arkane's consultation will run through the end of 2026, with no outcome named.
- Microsoft has not officially cancelled, confirmed or transferred Marvel's Blade. The cancellation report attributed to The Verge is still unconfirmed.
- Compulsion, Double Fine and Undead Labs left Xbox with their IP, back catalogs and runway funding, and State of Decay 3 will still launch day one on Game Pass.
- Ninja Theory now faces a proposed closure after two sale agreements fell through, which is a harder outcome than anything Xbox has said about Arkane.
- The wider reset cut 268 more roles and moved the next Halo to a new Activision team. Xbox says the restructuring is about three-quarters complete.
- The October 6 all-Xbox town hall is the next scheduled milestone, but Microsoft has not said it will cover Arkane.
The rest of Xbox's restructuring now has names and destinations: Halo goes to Activision, Obsidian to Bethesda, Forza and Fable to a merged studio, three studios to independence and one to a proposed closure. Arkane Lyon is the only studio in the memo with no stated outcome, and the process Booty described will run until the end of 2026. Until then, Marvel's Blade is an announced game with no platform, no release window and no confirmed publisher, and a decision on Arkane's ownership will likely also decide the game's fate.