Arkane Austin’s closure still casts a long shadow, with Dishonored’s director lamenting the projects and potential left on the cutting‑room floor — "We were making something very cool."

The thousands of game developer layoffs and numerous studio closures that have come in the past several years have all been devastating, but one that left a particularly long-lasting sting for many was Microsoft and Xbox's shuttering of Arkane Austin in 2024. Known for creating the acclaimed stealthy immersive sim Dishonored as well as the 2017 cult classic Prey, the developer got the axe a little over one year after its 2023 co-op vampire-hunting FPS Redfall flopped at launch.

Arkane Austin's shutdown was a tragic end for the studio's employees and for fans of its creative, systems-driven games, and it's also one we haven't gotten much of a behind-the-scenes perspective off. At least, not until now.

Recently, former director Harvey Smith — known for contributing to System Shock and Deus Ex, in addition to Arkane Austin's projects — went on the My Perfect Console podcast to discuss his time in the gaming industry, and recounted what it was like for him and for other Arkane devs to get the bad news.

"I got a call the night before and spent a very stressful night thinking about that, every company makes the decisions they make for the reasons they make them," Smith said. "I don't agree with them often."

"It was a shock, because we had done really good work, and this is a group of people, in some cases, who had worked together for one project [and] in other cases, like me and Ricardo Bare [Prey and Prey: Mooncrash writer] for instance, had worked together since the late nineties," he continued.

But while the closure of Arkane Austin led to many painful breakups of longtime developer partnerships, Smith noted that he was worried most about the effects of the shutdown on younger devs.

"Who I really felt for were the people that were new, like, this was their first project, or they'd only been in the industry for a little while," he explained. "Mostly it was shock and it was trying to help, especially the people that, for whom, this was just a mind-blowing experience."

Smith then told host Simon Parkin that for a time, he hadn't processed the shutdown on a personal level much, as he was "head down" on improving Redfall before Arkane Austin's impending dissolution. Redfall infamously had disastrous stability issues in addition to its controversial gameplay design; Smith and others worked intensely to resolve these, and "only really a couple of months into it did I stop and breathe."

Ultimately, he believes Redfall may have been more positively received if the game launched in its improved 1.4 state, and is thankful that Microsoft and Xbox allowed the devs to patch the title up after launch. However, he argues that closing the studio was the wrong call.

"It was not a decision I agreed with. I did believe very much in the future of the studio. We were working on something very cool," Smith said.

It ultimately wasn't confirmed what that "very cool" project was, though he did go on to note that Arkane Austin was, at one point, creating a new Thief game, though development stopped after Eidos Interactive retained control of the property.

Interestingly, he also made mention of a Blade Runner game that the studio was working on for a time. "We were working for a while on a Blade Runner game, which was super exciting to me," he said. "What we could have done with Blade Runner…"

As a huge fan of Dishonored and Prey myself, losing Arkane Austin was crushing, and has me worried for the future of immersive sims like those titles. One excellent one you can play right now is the Early Access game Gloomwood from DUSK developer David Szymanski and publisher New Blood Interactive, and there's a chance Marvel's Blade — in development at Austin's sister studio Arkane Lyon, responsible for Deathloop and Dishonored 2 — could be one as well.

Was Microsoft and Xbox wrong to close Arkane Austin after Redfall flopped with critics and consumers? Do you think it made the right call? Let me know what you think in the comments.

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