Microsoft Stops Work on Xbox Exclusive Contraband

Microsoft has ended active development on Contraband, the co-op action-adventure open-world title from Avalanche Studios Group, after more than four years of work. The game was first announced at E3 2021 with a pre-rendered teaser and was pitched as a “co-op smuggler’s paradise” set in the fictional 1970s world of Bayan. Despite its early buzz, no release date was ever given, and little was shown in the years that followed. Avalanche, known for the Just Cause series, confirmed on its website that the project’s future is now under evaluation, though the statement stops short of calling it a full cancellation.

“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,” – The studio’s statement read.

Bloomberg first reported the news, noting the similarities to other Xbox projects that have been shelved after lengthy development cycles. Contraband was planned as an Xbox console exclusive with a simultaneous PC release. The concept promised a large-scale open world with cooperative play, designed around smuggling operations in a 1970s setting. Beyond the initial teaser and short official description, neither Microsoft nor Avalanche provided significant gameplay details over the past four years. That lack of updates, combined with recent corporate shifts, now appears to have sealed its fate.

The decision comes during a turbulent period for Microsoft’s gaming division. In July, the company announced nearly 9,000 job cuts across multiple departments. Xbox was directly impacted, with Microsoft Gaming CEO Phil Spencer telling employees that the aim was to position the division “for enduring success” by focusing on strategic growth areas, ending or scaling back work in some parts of the business, and removing layers of management to increase agility. That restructuring has already claimed other high-profile titles.

Earlier this summer, Rare’s Everwild was also canceled. That project, an open-world adventure first revealed in 2019, had gone through years of quiet development, a reported reboot in 2021, and little concrete information about its gameplay. The Initiative’s reboot of Perfect Dark and an online title code-named Blackbird have also been scrapped in the wake of Microsoft’s cost-cutting measures. While each project had different challenges, the common factor is that they had all been in development for extended periods without nearing completion.

Contraband’s shelving reinforces a pattern that has emerged at Xbox in 2025: large-scale, long-in-development exclusives are being reevaluated or canceled outright as Microsoft looks to streamline its portfolio. The cancellations may free up resources for projects that are closer to release or more aligned with Xbox’s current strategic goals, but they also mean fewer ambitious, experimental titles will make it to market in the near term.

For Avalanche Studios Group, the move raises questions about its next steps. The Swedish developer has built a reputation for large open-world environments, often with chaotic, sandbox-style gameplay. Without Contraband moving forward, it’s unclear whether Avalanche will redirect its efforts toward new original projects, continue work on existing franchises like Just Cause, or pursue partnerships outside the Xbox ecosystem.

Microsoft has not confirmed whether Contraband is permanently canceled or merely on indefinite hold. However, given the current wave of layoffs and prior examples of projects in similar positions, the outlook is not encouraging. For now, fans who were looking forward to the 1970s smuggling adventure will have to wait for any update, which Avalanche says will come “as soon as we can.”

In the broader context, Xbox’s 2025 lineup remains in flux. While some titles are moving forward toward release, the removal of multiple long-running projects suggests a tightening focus on fewer, more commercially viable games. Whether this shift will ultimately strengthen the platform or diminish its variety remains to be seen, but Contraband’s fate is a clear example of the challenges facing big-budget game development in the current industry climate.