Avalanche Studios Shutters UK Office, A Casualty of Canceled Xbox Exclusive
2025-10-01
Image credit: AI-generated by Gemini Imagen
In a stark illustration of the brutal realities of modern AAA development, Avalanche Studios Group has announced a significant corporate restructuring, resulting in the closure of its Liverpool studio and layoffs across its Swedish locations. The move, which will eliminate approximately 50 jobs—roughly 9% of the company's global workforce—is the direct and immediate fallout from the cancellation of Contraband, a co-op smuggler game that was in development as an Xbox exclusive.
This is not a story of a studio in decline, but of one caught in the unforgiving gears of publisher strategy and industry-wide contraction. Avalanche, the celebrated developer behind the explosive Just Cause series, has been forced to make a painful sacrifice, one that underscores the precarious position of even established studios when a flagship project tied to a first-party platform holder is suddenly terminated.
A Project's Demise, A Studio's End
The most severe consequence of the restructuring is the shuttering of the company's Liverpool office. According to reports from GamesIndustry.biz, the studio was first established in 2021 following the acquisition of local developer Fabrik Games. Its closure just a few years later serves as a grim testament to the volatility of the current market, where a studio's existence can be directly tied to the fate of a single, high-stakes project.
The cuts are not confined to the UK. As confirmed by reports from outlets including PCGamer and Eurogamer, the layoffs will also impact staff at Avalanche's core studios in Malmö and Stockholm. While the company is framing the decision as a necessary step towards long-term stability, the immediate cause is clear. Reports widely corroborate that the cancellation of Contraband by Microsoft was the catalyst that forced Avalanche's hand.
In a statement to GamesIndustry.biz, the company acknowledged the move as "an exceptionally difficult decision, but we believe it's necessary to ensure a stable and sustainable future for the company."
Separately, in remarks provided to Eurogamer, the studio addressed the human cost of the restructuring. "Our focus is now on supporting all Avalanchers through this challenging time," the company stated. "We're grateful for the invaluable contributions of those leaving and remain committed to creating incredible gaming experiences for our players."
The Silence from Redmond
While Avalanche has been public with its difficult decision, a conspicuous silence emanates from its publishing partner. The dossier of initial reports, as covered by RockPaperShotgun and others, contains no official statement or reasoning from Microsoft or Xbox regarding the cancellation of Contraband. The decision to shelve a first-party exclusive has had a tangible, devastating impact on a partner studio, yet the platform holder has offered no public explanation for the move.
This information vacuum extends to the finer details of the restructuring itself. The initial announcements do not provide a specific breakdown of how many employees are being laid off from the Stockholm and Malmö studios versus the number impacted by the Liverpool closure. Furthermore, beyond a general commitment to support them, the precise details of the severance and aid packages being offered to the 50 affected employees have not been made public.
Avalanche Studios now faces the difficult task of navigating a future without a major exclusive project and with a smaller, consolidated workforce. The closure of its Liverpool studio is more than just a line item in a restructuring plan; it's a clear signal of the immense risk independent developers undertake when they tie their fortunes to the shifting priorities of console giants. For the 50 developers whose jobs were lost, it is a harsh reminder that in the world of big-budget game development, even the most promising projects can vanish, taking careers and studios with them.