Microsoft is preparing to shut down at least five Xbox Game Studios as part of a major restructuring effort, according to insider sources. The closures come amid declining revenue and will reportedly affect studios behind major franchises. This represents a significant shift in Microsoft's gaming strategy as the company faces financial pressure.

Arkane Studios, known for Dishonored and the upcoming Marvel's Blade, is among the studios facing closure. Sources indicate that Marvel's Blade will be cancelled along with the studio shutdown. Development on the game allegedly progressed slowly, frustrating Microsoft executives who were already reconsidering their investment. The closures suggest Microsoft is pivoting away from certain ambitious projects.

Other studios at risk include Ninja Theory, Undead Labs, Compulsion Games, and Double Fine Productions. Microsoft reportedly uses this period to seek buyers for some studios, though layoffs appear inevitable. Up to 1,000 employees may lose their jobs when cuts take effect, potentially on July 6. The company has not confirmed any details publicly.

This restructuring signals Microsoft's attempt to streamline operations and focus resources on fewer, more profitable ventures. For gamers, it means cancelled anticipated titles and fewer studios creating diverse content. The move reflects broader industry challenges as companies grapple with rising development costs and uncertain returns on major releases.