The announcement comes after four years of development without any significant updates or an official release date.

Insiders indicate that the halt in Contraband's development was a decision made by Microsoft, although other collaborations, like Hideo Kojima's projects, remain unaffected.

The cancellation of Contraband adds to a growing list of delays and cancellations within Microsoft's gaming operations, including significant titles like Fable.

Currently, there are no further layoffs expected in the Xbox publishing division, and it is hoped that Avalanche Studios can continue without losing more team members.

Set in a fictional 1970s world called Bayan, Contraband was marketed as a co-op smuggler's paradise and was intended to be an Xbox console exclusive.

Speculation about the game's status intensified when its reveal trailer was removed from the official Xbox YouTube channel, although it remains available on other platforms.

Despite the setback, there is a glimmer of hope that Contraband could find a new backer or be self-published, although optimism is low.

The game's development had been shrouded in silence since its teaser trailer was revealed at E3 2021, with no gameplay showcased since.

This situation reflects broader industry challenges, as evidenced by Romero Games also losing funding for a project following Microsoft's layoffs.

Avalanche Studios has officially canceled the development of its open-world game Contraband, as reported by Bloomberg journalist Jason Schreier.

This decision follows recent layoffs at Microsoft, which have raised uncertainties about the future of various projects, including those in Xbox's publishing division.

Avalanche Studios had previously emphasized the project's ambition and the use of their Apex Engine to leverage next-gen console capabilities.