Report: Xbox cancels Contraband from Avalanche Studios

UPDATE: Avalanche has delivered a statement, confirming that development on Contraband has stopped.

"Over the past several years, Avalanche Studios Group and Xbox Game Studios Publishing have collaborated on Contraband. Active development has now stopped while we evaluate the project's future. We're thankful for the excitement we've seen from the community since we announced and will give an update on what's next as soon as we can."

Microsoft has chosen to cancel Contraband, a new game that had been in development for years, sources tell Bloomberg's Jason Schreier.

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Another major Xbox game has been cancelled, as per new reports. Sources say that Contraband, a mysterious new game announced in 2021 from Just Cause developer Avalanche, has been scrapped and cancelled.

"Xbox is canceling Contraband, announced in 2021 from Avalanche Studios. (Just Cause), after four years of radio silence, sources tell Bloomberg News. This news arrives weeks after a mass layoff in which Xbox canceled several other big titles," Schreier said on Bluesky.

Kojima's wonderfully weird film-game hybrid is safe, though:

"OD, the collaboration between Xbox and Hideo Kojima, is still in development, a Microsoft spokesperson tells me," Schreier says.

Microsoft recently laid off hundreds of Xbox workers as part of mass company-wide layoffs, leading to multiple game cancellations and even a studio closure. The Initiative, a homegrown game studio built from the ground up specifically to work on Perfect Dark, was shut down alongside the studio's darling project, an FPS based on the Perfect Dark series.

Rare's new game Everwild was shut down shortly before the studio celebrated its 40th anniversary. Meanwhile, Sea of Thieves is still going strong.

There are reports that Microsoft has replaced some of the laid off workers with AI-based tools and software, and that the workers themselves had been training the AI before their roles were eliminated.

It's unclear if more projects could be cancelled as Microsoft allocates more spending on artificial intelligence--the company wants AI spending to reach $80 billion by the end of this fiscal year.