Microsoft Stops Development on Contraband

Microsoft has officially halted active development on the open-world co-op game Contraband, a project that had been in production for five years. Developed by the Sweden-based Avalanche Studios and published by the Xbox team, the title was originally announced during the 2021 E3 showcase. Following years of limited public updates and the recent removal of the game’s official trailer from public view, the studio confirmed that development is currently on hold while the project's future is evaluated.

This decision occurs against a backdrop of broader organizational restructuring within Microsoft’s gaming division. In July 2025, the company implemented a workforce reduction affecting approximately 9,000 employees, or 4% of its total staff. These cuts included the closure of the studio The Initiative and the cancellation of previously announced titles such as Everwild and Perfect Dark. Furthermore, the Xbox publishing division—which manages partnerships with external developers—has faced significant personnel changes, including the departure of its longtime leader, Peter Wyse, and the reduction of its production staff.

Despite these cancellations, Microsoft maintains a portfolio of over 40 games in development and continues to support upcoming projects from partners such as Kojima Productions, Platinum, and Asobo. While the company reported a 10% increase in gaming revenue for the April-June 2025 quarter, financial leadership has projected a decline in revenue for the subsequent quarter. Microsoft has indicated that it does not anticipate further layoffs within the Xbox team resulting from the specific decision to pause development on Contraband.