Avalanche Studios Closes Liverpool Branch Following Contraband Cancellation

Avalanche Studios, best known for the Just Cause franchise, has confirmed sweeping layoffs across its organization, with its Liverpool studio permanently closing and all staff being laid off. The cuts also extend to the company’s Malmö and Stockholm offices, which will see staff reductions and team restructuring.

The announcement follows the cancellation of Contraband, an Xbox-exclusive title in development since 2021, which was formally shelved earlier this year amid Microsoft’s wide-ranging layoffs.

In a statement published on its official website, Avalanche explained:

“In light of current challenges to our business and the industry, we have thoroughly reviewed how to best ensure Avalanche Studios Group's long-term success. This review has led us to the difficult conclusion that we must make changes to our staffing and locations. As a result, we are proposing to close our Liverpool studio, and to initiate a collective consultation process, as required by UK law. This will impact all Avalanchers in Liverpool. The changes will also impact our other studio locations in Malmö and Stockholm, where we will reduce our workforce and restructure teams to address our games' needs. Our immediate focus is to offer full support to all Avalanchers during this challenging time. Despite these changes, we remain deeply committed to providing amazing games to our passionate player communities.”

The cancellation of Contraband, an open-world co-op heist game announced in 2021 as an Xbox exclusive, was a major blow to Avalanche. While speculation began earlier this year when the official Xbox YouTube channel quietly set the Contraband trailer to private, confirmation came about a month later that the project was indeed cancelled.

The move was part of Microsoft’s 9,000+ layoffs in July, tied to its pivot toward AI investments. High-profile titles such as Perfect Dark, Everwild, and ZeniMax Online’s unannounced MMO were also affected by the restructuring.

Initially, when Avalanche announced smaller rounds of layoffs while Contraband was still in development, there was hope that the studio might weather the storm with the project still active. But with the game cancelled and the Liverpool branch shuttered entirely, the studio now faces a far more precarious outlook.

Avalanche has not disclosed the exact number of staff affected by the closures and layoffs. According to its corporate site, the studio employed around 600 developers across its three branches before the cuts. The Liverpool branch, however, is now being dissolved entirely.

The closures mark a sobering chapter for Avalanche, which has long been recognized for its expertise in building large-scale open-world games. While the company stresses its continued commitment to its player community, the future of its remaining teams in Malmö and Stockholm will depend heavily on how the studio navigates the aftermath of Contraband’s cancellation and the broader industry downturn.

Do you think Avalanche can rebound after Contraband’s cancellation, or is this the beginning of a long decline for the studio?