Just Cause developer Avalanche Studios closing UK studio in workforce restructure, following cancellation of Xbox exclusive Contraband

Avalanche Studios is the latest developer to be impacted by layoffs, as the company’s UK studio is set to be closed as part of a workforce restructure that will impact its Swedish studios too.

The studio is known for the Just Cause series (not to be confused with Hogwarts Legacy developer Avalanche Software, owned by Warner Bros.) and was previously working on an Xbox exclusive called Contraband.

However, that project was cancelled by Microsoft back in August, with the studio writing in a statement: “Active development has now stopped while we evaluate the project’s future.”

In a statement shared by the company today, the decision to restructure has been made “in light of current challenges to our business and the industry”.

It continued: “This review had 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 Malmő and Stockholm, where we will reduce our workforce and restructure the teams to address our games’ needs.”

It concluded: “Despite these changes, we remain deeply committed to providing amazing games to our passionate player communities.” The statement does not mention Contraband and its cancellation specifically.

Contraband, a co-op smuggling game, was revealed in June 2021 at the Xbox and Bethesda Games Showcase, but little of the game has been shown since. Its official trailer has been removed from the Avalanche website, though you can see IGN’s video above.

Its cancellation arrived in the wake of layoffs across Microsoft in July, which resulted in the cancellation of multiple projects including The Initiative’s Perfect Dark, Rare’s Everwild, and an unannounced ZeniMax MMO.

Microsoft CEO and chairman Satya Nadella later claimed “Microsoft is thriving”, largely due to its investments in AI.

Back in 2024, Avalanche Studios entered a collective bargaining agreement with Swedish unions, which was planned to go into effect by the second quarter of this year.

“Over the past years, we’ve taken significant steps toward making Avalanche one of the best workplaces in the games industry,” Avalanche CEO Stefanía Halldórsdóttir said at the time.