The future of Arkane Lyon, the studio behind Dishonored and Deathloop, is still undecided, but it just bought a little more time. Microsoft has extended a legally required consultation over the studio’s fate by one month and says it is looking for a partner to help finish Marvel’s Blade. If no solution is found, documents reported in France point to a possible closure.
What happened
PC Gamer reported on October 23, 2026, citing French newspaper Le Monde, that the deadline to find a buyer for Arkane Lyon was set for November 13, after which Microsoft could close the studio. Microsoft has since extended it by a month.
A Microsoft representative told PC Gamer: “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. This is a defined extension, and we remain committed to keeping the Works Council informed throughout the process.”
GamesRadar+ also reported the extension on October 26. Microsoft’s statement does not give an exact new end date, so we list it as one month beyond November 13, exact date TBD.
How Arkane got here
According to PC Gamer:
- Arkane Lyon was caught up in Xbox layoffs announced in July, which the outlet says will affect roughly 3,200 people.
- Le Monde reported that on July 16, Arkane management told employees Xbox intended to close the studio.
- Because Arkane is in France, a law there requires companies with more than 1,000 employees that want to close a site to first look for a buyer. That triggered the consultation now underway.
- Documents published on a French government website reference “the plan for the complete and permanent cessation of the company’s activities.” Microsoft told PC Gamer those documents “are part of the required consultation process and do not represent a final decision.”
- Le Monde reports Arkane employs 217 people.
Marvel’s Blade is the wild card
Marvel’s Blade was announced at The Game Awards in 2023. Its status is disputed. GamesRadar+ notes that a union representative told Le Monde the game was nearing completion, while PC Gamer says its sources claim it still has years to go. A release date is TBD.
Microsoft’s mention of a “partner to support the studio through the development work still ahead” strongly suggests Blade is central to any deal. A publisher or investor that wants a Marvel game could see value in taking on the team that is building it.
What it means
For players, Blade’s fate is tied to Arkane’s. If a buyer or partner steps in, Blade has a path to release. If not, the game’s future is unclear. Microsoft has not said what happens to the project if the studio closes.
Labor law is shaping game industry outcomes. In the U.S., studios can be shut down quickly, as several Xbox-owned teams have been this year. French rules forced a slower, more public process. That process is the only reason Arkane still has options, and it gives outsiders unusual visibility into how these decisions get made.
Even a sale may mean cuts. GamesRadar+ points out that if Arkane is bought, a new owner may still cut jobs. A rescue is not the same as everyone keeping their job.
It reflects a wider Xbox reset. PC Gamer reports that Xbox spun out or shed several studios this year, including Double Fine, Compulsion Games and Undead Labs, with Ninja Theory appearing to close. Arkane’s situation is one piece of a much larger reshaping of Microsoft’s gaming business.
What to watch
- Whether a buyer or development partner is announced before the extended deadline.
- Any update from Microsoft or Marvel on Blade’s development and release plans.
- Union statements in France on redundancy negotiations.
The bottom line
Arkane Lyon has another month, and Microsoft is openly looking for a partner to help finish Marvel’s Blade. That is better news than an outright closure, but nothing is settled. Fans of Dishonored and immersive sims should watch the next few weeks closely.
Sources
- PC Gamer, “Time could be running out for Arkane” (Oct. 23, 2026): https://www.pcgamer.com/gaming-industry/time-could-be-running-out-for-arkane/
- GamesRadar+, “Microsoft extends deadline to ‘explore options’ for Dishonored studio Arkane’s future as the team continues work on Marvel’s Blade” (Oct. 26, 2026): https://www.gamesradar.com/games/action/microsoft-extends-deadline-to-explore-options-for-dishonored-studio-arkanes-future-as-the-team-continues-work-on-marvels-blade/