Change is afoot at Xbox’s Arkane Studios and MachineGames — with Machine’s co-founder taking over Arkane’s operations

Developer July 4, 2026No Comments

Xbox is having major changes, slated to go live in full this Monday from what we’ve heard.

Xbox CEO Asha Sharma has been signalling for weeks that Xbox’s studios need a “reset.” As Microsoft’s gaming empire has struggled in the new economy, Xbox is pursuing a variety of cuts, sell-offs, and potential team mergers in order to reduce costs. Studios like Undead Labs, Double Fine, Compulsion, and others have reportedly been in negotiations with Xbox about what their futures’ look like, and for some, that future might be bleak in the short term.

The Verge reported that one of those studios up for negotiations was Arkane Studios, currently working on Marvel’s Blade. Arkane is known for Dishonored and Death Loop, but has struggled to find its footing arguably under Microsoft. Blade was a chance to change that, but The Verge’s reporting suggested that Microsoft was actually considering closing the studio.

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This latest update suggests that Microsoft may have found an alternative path.

The leadership change was spotted by Timur222 on X early this morning. (Image credit: @Timur222 on X)

Spotted by Timur222 on X early this morning, it seems that MachineGames co-founder and studio director Jerk Gustafsson has taken over leadership of Arkane Studios. Arkane’s president, Leonard Bendel, has resigned. The leadership change over happened a few days ago, on June 30th, according to a legal notice on French enterprise information site Pappers.fr.

Indeed, at least from my end, I’ve heard there’s no plans to actually end development on Blade, although there’s clearly some major potential restructuring going on here.

Arkane is based in France, with MachineGames based in Sweden. Microsoft is investing in MachineGames following the success of Indiana Jones, but also on the basis of the popularity of the Wolfenstein franchise. Indeed, Microsoft is actually developing a TV show based on Wolfenstein with the Fallout TV producers for Amazon — which fits heavily into Asha Sharma’s trans-media vision for Xbox. Wolfenstein 3 is in production to that end, according to our sources, with the goal of the TV show and game complimenting each other Fallout TV-style.

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What this leadership change means for Arkane overall remains to be seen. Xbox is expected to join Microsoft in general with broad cuts from as early as Monday next week. Every studio and team is likely to be impacted in some form, as are teams across Windows, Azure, and so on more broadly.

Could this leadership change signal that Arkane is going to merge with MachineGames to forge a bigger overall studio? Is Jerk Gustafsson being promoted across with the intent of the studios remaining separate? It’s hard to say for sure right now. Given the holiday weekend in the United States, I doubt we’ll be able to get comment from Microsoft in the near term.

In any case, I’m choosing to take this as a positive sign for Blade and Arkane, despite rumors of its potential closure.