The wave of layoffs rocking the video game industry has claimed another victim. Avalanche Studios, the developer behind the explosive open-world series Just Cause, has announced it is closing its Liverpool studio and making significant workforce reductions at its other locations. The news comes as a direct aftershock of Microsoft’s decision to cancel Contraband, the Xbox-exclusive title that was the Liverpool team’s primary project.
The Domino Effect of a Canceled Game
In a statement, Avalanche cited “current challenges to our business and the industry” as the reason for the drastic measures. However, the writing has been on the wall since August 2025, when Microsoft pulled the plug on Contraband. The ambitious co-op smuggler’s paradise, first announced in 2021, was being developed primarily by the Liverpool studio. When Xbox canceled the project as part of its own massive internal cuts, the UK team lost its flagship game and, ultimately, its reason for being.
This is the latest example of the dangerous ripple effect of publisher decisions. While Avalanche’s official statement doesn’t mention Microsoft or Contraband by name, the timing is unmistakable. A similar situation unfolded at Romero Games, which also faced layoffs after its Xbox-funded project was cut. The true scale of the industry’s job losses is often hidden in these secondary impacts, where third-party studios bear the brunt of a publisher’s change in strategy.
A Troubling Pattern for Avalanche
This isn’t the first time Avalanche has had to downsize. The company closed its New York and Montreal studios in 2024, shedding around 50 jobs. This latest round of cuts will impact the entire Liverpool team, as well as an undisclosed number of employees at its remaining studios in Malmö and Stockholm, Sweden. For a developer known for creating vast, chaotic sandboxes, its own world is shrinking at an alarming rate.
The future of the studio is now uncertain. With Contraband off the table and no new entry in the Just Cause series since 2018, Avalanche’s public-facing development pipeline appears empty. The studio has assured fans it remains “deeply committed to providing amazing games,” but without a clear project on the horizon, the path forward is unclear.
Frequently Asked Questions
What happened to Avalanche Studios?
Avalanche Studios is closing its Liverpool, UK, office and laying off an unspecified number of employees at its studios in Malmö and Stockholm, Sweden.
Why is the studio closing its Liverpool branch?
The closure is a direct result of Microsoft canceling Contraband, the Xbox-exclusive game that was the Liverpool studio’s main project. The loss of funding and the project’s cancellation led to the decision to shut down the studio.
What was Contraband?
Contraband was announced in 2021 as a co-op open-world game set in the fictional world of 1970s Bayan, described as a “smuggler’s paradise.” It was being developed by Avalanche and was set to be published by Xbox Game Studios.
Is this related to the broader gaming industry layoffs?
Yes. This is a direct consequence of the massive layoffs and project cancellations initiated by Microsoft in mid-2025. It highlights how cuts at major publishers create a domino effect that impacts independent and third-party partner studios.
What other games is Avalanche Studios known for?
Avalanche is best known for the Just Cause series, as well as developing games like Mad Max (2015) and co-developing Rage 2 with id Software.
Conclusion
The closure of Avalanche’s Liverpool studio is a somber reminder of the fragility of game development in today’s volatile market. It’s a story not just about corporate restructuring, but about talented developers losing their jobs due to decisions made miles away in a publisher’s boardroom. As the industry continues to contract, the fate of many studios remains tied to the whims of a few corporate giants. For the team in Liverpool, and for the industry as a whole, it’s a painful chapter in an ongoing story of uncertainty.