Microsoft's ongoing Xbox restructuring has reportedly brought its hammer down on one of its most anticipated first-party games, Marvel's Blade. As per reports, Microsoft is considering canceling the Arkane Lyon-developed title.

This decision comes as part of broader cost-cutting measures, which could also see multiple Xbox studios shut down, sold, or spun off. And now, a new report by The Verge has sparked concerns over the future of Xbox's only announced first-party Marvel game.

"I understand Microsoft is currently weighing closing at least five studios, including the developers behind Marvel’s Blade. Sources tell me Microsoft wants to cancel Blade as part of a wave of cost cuts and job losses that are planned for the company’s Xbox gaming division," wrote correspondent Tom Warren on June 30.

Warren's report claims that Marvel's Blade was originally targeting a late 2026 release. However, it was internally delayed to late 2027 after development reportedly exceeded its budget.

Arkane Lyon, the studio behind Dishonored and Deathloop, is also said to be among at least five Xbox studios being evaluated for closure or sale. Rather than closing the studio straightaway, Microsoft is now searching for a buyer for it.

But no agreement has been confirmed so far. And neither Microsoft nor Marvel Games has publicly commented on the reports and status of Marvel's Blade.

The reported restructuring is said to extend beyond Arkane. Studios such as Ninja Theory, Double Fine, Compulsion Games, and Undead Labs are also reportedly facing uncertain futures. And this comes as Xbox prepares for another round of organizational changes.

The latest claim also gets a solid base after wider reports suggest Microsoft plans another significant wave of layoffs across its gaming division.

Xbox CEO Asha Sharma had previously acknowledged the need for a "reset." She cited years of heavy investment alongside declining gaming revenue and rising hardware costs as the reasons behind that approach.

For now, Marvel's Blade remains an announced Xbox project. Also, neither Microsoft nor Arkane Lyon has confirmed its cancellation. Until an official statement is made, the game's reported cancellation remains speculation.

Todd Howard and Arkane recently suggested Marvel's Blade was progressing well

What makes the cancellation reports shocking is Bethesda Game Studios director Todd Howard's comments from just days earlier. Speaking about Arkane Lyon's progress, Howard revealed that he had recently seen the project and praised the team's work.

"I'm not at liberty to say when [we'll see more]," Howard said on May 22, per Entertainment Weekly. "But I saw some stuff just yesterday [on May 21] and the folks at Arkane are doing a really, really great job."

Despite the reassuring words from Howard, fans were already concerned about Marvel's Blade's future because of its absence from the 2026 Xbox Games Showcase.

Arkane Lyon concept artist Jean-Luc Monnet also addressed those concerns on social media. He posted "Let us cook" in response to speculation surrounding the title.

Those public reassurances make the latest reports particularly surprising.

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Written by

Nilendu Brahma

Edited by

Arundhoti Palit