In today's announcement of a staggering 3,200 layoffs at Xbox, the fate of one fan (and PC Gamer) favorite studio was left up in the air. Arkane Lyon, the remaining half of the modern immersive sim maestros, appears to be entering negotiations for an indie exit similar to other former Xbox studios."In France, Arkane's management is beginning required consultation with its Works Council to review potential strategic options," Xbox CEO Asha Sharma wrote in her missive on the mass layoffs. Former Kotaku editor Stephen Totilo has more context in his newsletter, Game File. According to Totilo, Arkane is "also slated for an exit" similar to Double Fine, Undead Labs, Compulsion Games, and Ninja Theory. "Given local laws, though, Microsoft has been unable to explore its future—ranging from sale, to management buyout to shutdown—until today," Totilo wrote. "The fate of the Blade game is contingent on the studio’s future."On Bluesky, Totilo wrote that Arkane's negotiations with Microsoft could lead to "100+" layoffs at the studio, depending on what form its future takes. Similar to the UK, which mandates a month-long redundancy process in the event of layoffs, muscular French labor laws prevent the sort of abrupt, day-and-date layoffs we're used to seeing in the United States. You can see the contrast most clearly with the fate of Arkane Lyon's dearly-departed, Texas-based twin. Arkane Austin was shut down by Microsoft in 2024, one of the first casualties of Xbox's ongoing disintegration.Regarding Arkane… how much? I’m asking for a friend 😝July 6, 2026Arkane Lyon's most recent game was 2021's Deathloop, the excellent Groundhog Day time loop immersive sim. Arkane announced an adaptation of Marvel's Blade in the summer of 2023, and we've heard little since—though Blade has consistently remained one of our most-wanted games. Previously, Arkane Lyon developed our 2016 game of the year, Dishonored 2, and Arkane Lyon level designer Romain Barrilliot was lead designer of Thief: The Black Parade, ModDB's 2023 mod of the year and a modern triumph of the immersive sim genre.As for those affected, I've only seen a telling non-comment from Arkane level design director, author, and Through The Looking Glass forum co-founder Dana Nightingale. "All I know is I'm really excited for everyone to read and love my upcoming book," she wrote.Arkane founder Raphael Colantonio, who left to start Weird West developer WolfEye Studios, had a cheeky response to Asha Sharma's layoff announcement post on Twitter: "Regarding Arkane… how much? I’m asking for a friend." Colantonio was likely joking, but stranger things have happened, and I think we're all waiting on a hero here.You can imagine the golden path: Minimal layoffs and an independent Arkane, or maybe ownership by an eccentric-yet-benevolent French billionaire who loves immersive sims. But that's far from certain, and like many immsim fans, I'll be contributing spirit bomb energy in hopes of a happy outcome. All I know is that Arkane has a design pedigree stretching all the way back to Origin Systems and Looking Glass Studios in the early '90s, and it would be a tragedy to have that ended by feckless corporate spreadsheet thinking. 2026 games: All the upcoming gamesBest PC games: Our all-time favoritesFree PC games: Freebie festBest FPS games: Finest gunplayBest RPGs: Grand adventuresBest co-op games: Better together