Insider claims Arkane Lyon and Compulsion Games to be shut down by Xbox

After hosting what many fans agreed was a solid Xbox Games Showcase earlier this month, Microsoft / Xbox have since found themselves surrounded by seemingly nothing but bad news. Alongside concerns of rising component costs, mixed messaging regarding console exclusives and more, insiders are now claiming that multiple Xbox studios could be on their way to being shut down soon including Arkane and Compulsion Games.

Following their recent summer games showcase, Microsoft have been talking quite a bit on the future of Xbox, referring to the next 100 days being a “reset” for the console maker while speaking candidly on some of the issues which the platform is facing.

In amongst all of this, multiple insiders have indicated that these changes could include a number of studio closures, with Mike Straw of Insider-Gaming claiming that both Arkane and Compulsion Games are “scared” and showing “real concern” that their studios could be shut down as part of these plans.

With regards to the latter, Kotaku’s Rebekah Valentine reported that Compulsion Games are indeed on the chopping block – although leadership at the studio is currently “in ‘negotiations’ with Microsoft over the studio’s fate”. Compulsion Games is of course known for their work on We Happy Few as well as the more recent South of Midnight.

While Arkane Austin was shut down back in 2024, their main studio – Lyon – has continued to operate and are supposedly currently working on the much-anticipated ‘Marvel’s Blade’. For context, Arkane Lyon is/was the more tenured of the two halves, being responsible for the likes of Dishonored 2; Deathloop and, as mentioned, the upcoming Blade.

Whether these studio closures will come to be or not, we will have to wait and see. That said, there is no denying that Microsoft / Xbox is planning a ton of changes over the coming months.

KitGuru says: What do you think of Xbox under Asha Sharma’s leadership? Have you been looking forward to Marvel’s Blade? Let us know down below.

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