The Ripple Effect: Xbox's 'Contraband' Cancellation Reportedly Triggers Avalanche Studio Closure
2025-10-01
Image credit: AI-generated by Gemini Imagen
Avalanche Studios Group, the developer behind the explosive Just Cause franchise, has shuttered its Liverpool, UK office. The closure, part of a wider company restructuring, will impact between 35 and 40 employees and brings an abrupt end to a studio established just four years ago in 2020.
While the company's official statement paints a picture of internal strategy, journalistic reports have pieced together a more troubling narrative. The Liverpool studio's closure is reported to be a direct consequence of Microsoft's decision to cancel or shelve Contraband, the highly anticipated Xbox exclusive the team was co-developing. The event casts a harsh light on the precarious nature of third-party partnerships, where the strategic pivot of a publishing giant can have devastating ripple effects.
A Necessary Decision or a Direct Consequence?
In its public announcement, Avalanche Studios Group framed the shutdown as a proactive measure to secure its long-term health. "This is an exceptionally difficult decision," the company stated, "but we believe it's necessary to ensure a stable and sustainable future for the company." This official reasoning points toward internal pressures and a need to streamline operations across its remaining studios in Stockholm, Malmö, and New York, which are not affected by the closure.
This corporate narrative, however, stands in stark contrast to details emerging from industry reporting. According to sources at multiple reputable outlets, the fate of the Liverpool studio was sealed not by an internal review, but by an external decision from its publishing partner. The cancellation of Contraband—a highly anticipated exclusive for the Xbox platform—appears to be the catalyst that made the studio and its staff redundant. The timeline suggests a direct cause-and-effect relationship, transforming a difficult restructuring into the collateral damage of a major project's collapse.
The Unanswered Questions Hanging Over Xbox
The reported cancellation of Contraband raises significant questions about the stability of Microsoft's first-party content pipeline and its management of third-party exclusive deals. For Avalanche Liverpool, the opportunity to co-develop a high-profile Xbox exclusive was a major project for the four-year-old studio. Its reported removal from the release schedule underscores the inherent risk for independent developers who tie their fortunes so closely to a single platform holder.
As the industry continues to navigate a period of widespread layoffs and project cancellations, this closure serves as a potent case study. The critical missing piece of the puzzle is an official confirmation from either Microsoft or Avalanche regarding the status of Contraband. Neither company has publicly addressed the game's fate, nor has Avalanche officially linked the closure to the project in its own statements. It is in this silence that the true story lies. For the 35 to 40 developers now seeking new work, the distinction between a "necessary restructuring" and a partner's change of heart is a profound one.
Sources for this article include reports from Eurogamer, Rock Paper Shotgun, and GamesIndustry.biz.