Arkane Lyon Gets a Reprieve as Microsoft Pushes Its Buyer Deadline Into December

The future of Arkane Lyon, the French studio behind Dishonored and Deathloop, is hanging in the balance. According to a new report from Le Monde, Microsoft has until mid-December to find a buyer for the 217-person studio or face the legal path to closing it outright, as Xbox’s ongoing restructuring claims another veteran developer.

Why Arkane Lyon Is Facing Closure

Arkane Lyon was swept up in the wave of Xbox layoffs announced in July, which is cutting around 3,200 jobs across the company. On July 16, just ten days after that announcement, studio management reportedly told employees that Xbox intended to close Arkane outright. Because the studio is based in France, Microsoft can’t simply shut the doors. Under the country’s Florange Law, a company with more than 1,000 employees that wants to close a facility must first spend at least three months searching for a buyer, and that search was originally set to expire on November 13.

Microsoft Buys One More Month

That November 13 deadline has now been pushed back. A Microsoft representative told PC Gamer that the company has extended the consultation period by an additional month to keep exploring its options, including finding a partner to continue supporting Arkane’s work on Marvel’s Blade. Regarding the documents filed with the French government in August that reference a full closure and the dismissal of all staff, the representative said the filings

“are part of the required consultation process and do not represent a final decision.”

Microsoft

In other words, nothing is finalized yet, but the paperwork for a full shutdown is already on file should no buyer emerge.

Deathloop, released in 2021, is one of Arkane Lyon’s most recent original releases.

What Happens to Marvel’s Blade and the Studio’s 217 Employees

Arkane Lyon is currently the sole developer working on Marvel’s Blade, first revealed at The Game Awards back in 2023. According to GameSpot, sources close to the studio say the game still has years of development left despite that early reveal, and IGN has reported that a new showing is still being targeted for early 2027 ahead of a Q4 2027 release. Two unions representing Arkane’s staff, Printemps Écologique and the Syndicat des Travailleur·euses du Jeu Vidéo, pushed for more time to negotiate, and their efforts appear to be part of why the deadline moved. GameSpot also reports that the unions’ options include relocating affected staff to other Xbox studios or pursuing legal action against Microsoft. Bloomberg’s Jason Schreier has separately said multiple paths are still being explored and that he would be surprised if the studio is ultimately shut down.

Dishonored 2 remains one of Arkane Lyon’s defining games, nine years after its 2016 release.

Part of a Bigger Pattern at Xbox

Arkane Lyon’s 27-year history includes Arx Fatalis, Dark Messiah of Might and Magic, and the Dishonored series, and its sister studio Arkane Austin was shut down in 2024 following the critical failure of Redfall. The Lyon studio’s current situation stems from the same July restructuring that saw Xbox cut ties with Double Fine, Compulsion Games and Undead Labs, while Hellblade developer Ninja Theory moved toward its own closure. Most of those studios have since gone independent, leaving Arkane Lyon as the last major question mark from that round of cuts.

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Picture Source: Arkane Studios / Bethesda Softworks, Arkane Studios / Bethesda Softworks