Avalanche Studios Group announced the permanent closure of its Liverpool studio in November 2025, impacting 31 employees. The closure followed a collective consultation process, as required by UK law, which also involved negotiations on severance terms, extending the timeline of the closure over several months.
This marks the third studio closure for Avalanche in about eighteen months, with previous shutdowns of its New York and Montreal studios in 2024. The Liverpool studio, although never releasing a major title, was heavily involved in the development of Contraband, a cooperative action game published by Xbox that was officially halted earlier in 2025.
Reasons Behind the Closure
Avalanche cited “current challenges to our business and the industry” as the driving factors behind the decision to close the Liverpool studio and reduce workforce at its Malmö and Stockholm locations. The company reviewed its operations thoroughly to ensure long-term stability and success.
The cancellation of Contraband, following Microsoft’s significant layoffs and restructuring within its gaming division in July 2025, is widely seen as a key event influencing Avalanche’s restructuring and studio closures. Contraband had been in development since 2021 but never advanced beyond early production.
Impact on Avalanche Studios Group
Although the Liverpool studio’s closure is a blow, Avalanche still maintains studios in Stockholm and Malmö, which will also see workforce reductions and internal restructuring. The company aims to focus its resources on existing and future projects that address evolving market demands.
The future of the Contraband project remains uncertain, and with no new announced projects from the Liverpool studio, the closure signals a shift in Avalanche’s strategic priorities under the pressures of the global gaming industry downturn.
Industry Context
Avalanche Studios joins a number of developers facing consolidation and layoffs in 2025 due to economic uncertainties, changing market trends, and publisher restructuring. Microsoft’s decision to halt works on multiple first-party projects like Everwild and Perfect Dark also contributed to industry-wide instability.
While Avalanche has not disclosed specific details on the projects that will benefit from the newly reallocated resources, the underlying message is one of streamlining for sustainability and future growth.
Frequently Asked Questions
How many employees were laid off due to the Liverpool studio closure?
Avalanche confirmed 31 employees were affected by the Liverpool studio closure.
What happened to the game Contraband?
Contraband was officially halted in 2025 following production issues and corporate restructuring within Microsoft’s gaming division. The game’s future remains unclear.
Does Avalanche still have active studios?
Yes, Avalanche continues to operate studios in Stockholm and Malmö, although these locations are undergoing workforce reductions and restructuring.
Was the Liverpool studio responsible for any released games?
No major titles have been released by the Liverpool studio. It was primarily involved in early development on Contraband and possible support roles for other projects.
What does this mean for Avalanche’s future projects?
The closure indicates a strategic shift focusing on sustainability and possibly developing new projects with reduced operational overhead. Existing studios will likely continue to support this effort.
Conclusion
The closure of Avalanche Studios’ Liverpool facility reflects the difficult terrain facing many game developers in 2025. Economic and industry shifts are forcing companies to consolidate and refocus. While it’s a setback for those affected, Avalanche Studios Group is adapting to ensure the long-term viability of its core teams and projects in Stockholm and Malmö.