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Xbox has officially stopped development on Contraband, the long-awaited co-op smuggler game from Avalanche Studios (developer for Just Cause), four years after its E3 2021 reveal.
The announcement follows months of industry cuts and project cancellations across Microsoft’s gaming division.
Four Years of Silence End in Cancellation
BREAKING: Xbox is canceling Contraband, announced in 2021 from Avalanche Studios (Just Cause), after four years of radio silence, sources tell Bloomberg News. This news arrives weeks after a mass layoff in which Xbox canceled several other big titles.
— Jason Schreier (@jasonschreier.bsky.social) August 8, 2025 at 12:56 AM
The news first surfaced via Bloomberg’s Jason Schreier on Bluesky, who reported that the game was canceled entirely. Hours later, Avalanche confirmed the update on its official site:
“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.”
Contraband was initially pitched as a “co-op smuggler’s paradise” set in the fictional 1970s world of Bayan. The reveal trailer, shown during Xbox Games Showcase 2021, featured Steely Dan’s Do It Again and teased a crew preparing for a heist; however, no gameplay or development updates followed in the years after.
Development Challenges and Industry Cuts
Behind the scenes, Contraband’s development faced internal challenges. In 2022, reports surfaced of management disputes at Avalanche over a controversial hire and poor communication. This led to the formation of a union club and calls for a collective bargaining agreement within the studio.
The cancellation comes amid major layoffs at Microsoft, which cut 9,100 jobs company-wide last month, including hundreds in gaming. Other high-profile Xbox projects have also been shelved, such as Perfect Dark, Everwild, and a new MMORPG from ZeniMax Online Studios.
What Could Have Been
Contraband was set to combine open-world exploration with cooperative smuggling missions, leveraging Avalanche’s experience from the Just Cause series. Many fans were intrigued by its unique premise, but after four years without updates and the recent removal of its reveal trailer, its future now appears grim.
While Avalanche’s statement leaves the door open for a possible revival, perhaps with a new publisher, the current market makes such a move uncertain.
A Pattern of Project Cuts at Xbox
This cancellation adds to a growing list of halted Xbox projects. Alongside the recent studio closures, reports suggest Microsoft is reallocating resources toward emerging technologies, including generative AI.
For now, Contraband joins the ranks of ambitious Xbox titles that never made it past the reveal stage, leaving fans with nothing more than a single teaser trailer and a premise that could have offered something truly different in the co-op space.
