Xbox Seeks Partner to Support Arkane Lyon as It Finishes Marvel's Blade, Extends Search for Buyer

Microsoft has said it's exploring the possibility of a company coming in to support Arkane Lyon as it works to finish development of Marvel's Blade, and that it's extending the deadline to find a buyer for the studio.

Arkane Lyon's 217 employees are currently at risk of losing their jobs unless a buyer is found for the famed immersive sim studio. According to a recent report, Microsoft wanted to close the studio as part of its sweeping cuts in the summer, but French law prevented it from doing so straight away.

Following that report, which claimed Arkane had until November 13 to find a new owner, Microsoft has extended the deadline by a month. Additionally, it said it's looking for a partner to "support" Arkane, presumably with financing, for the final stretch of Marvel’s Blade's development.

"We have extended the consultation period by one additional month as we explore options, including finding a partner to support the studio through the development work still ahead," a Microsoft representative told PC Gamer. "This is a defined extension, and we remain committed to keeping the Works Council informed throughout the process."

The studio was first informed of Microsoft’s decision on July 16, shortly after new Xbox CEO Asha Sharma announced similar plans for Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs — Ninja Theory was closed while the other studios went independent. Over 1,600 jobs were cut as part of the layoffs across Microsoft's gaming business. More followed, and more are to come.

Bloomberg journalist Jason Schreier said he’d be surprised if Arkane Lyon ends up being shut down, however. “Let me share some positive news for a change,” he said on BlueSky. “Despite all the gloomy headlines today, my understanding is that there are multiple paths actively being explored that would save Arkane Lyon.

“Anything can happen during negotiations, but at this point I'd be surprised if the studio is shut down. One important piece of context that many people might not realize: Shutting down a game studio is expensive. Shutting down a French game studio — thanks to labor laws requiring an extended severance period — is VERY expensive. Xbox doesn't want to take on those costs.”

The union is currently pushing for re-employment of affected staff to other studios within Xbox, should Microsoft fail to secure a deal for Arkane Lyon to survive. "The redundancy plan must be adapted to the video game market where, currently, the prospects for returning to work are extremely limited,” said a union rep.

Negotiations are ongoing, but the union hasn’t ruled out seeing Microsoft in court. "Microsoft is looking to divest itself of Arkane, even though the studio is doing well, in order to save money and improve the profitability of its short-term investments," said the rep.

Marvel’s Blade was on track for a reveal early next year and a release in the fourth quarter of 2027, IGN understands. Blade was announced in December 2023 with a reveal trailer, but we've seen nothing of it since. In June, Bethesda Game Studios head Todd Howard was quoted as saying he'd recently seen what Arkane Lyon was cooking up and was impressed. "I'm not at liberty to say when [we'll see more]," Howard teased at the time, "but I saw some stuff just yesterday [on May 21] and the folks at Arkane [Studios, the developers] are doing a really, really great job."