Microsoft has officially canceled Contraband, the long-awaited co-op smuggling game developed by Avalanche Studios, after nearly four years without updates. The news was first reported by Bloomberg journalist Jason Schreier, who cited sources familiar with the matter. Schreier also confirmed through a Microsoft spokesperson that OD, the upcoming horror title from Kojima Productions, is still moving forward.
Contraband was originally unveiled during the Xbox and Bethesda Games Showcase in 2021 as a first-party exclusive. It was billed as a cooperative multiplayer game set in the 1970s fictional world of Bayan, described by the developers as a “smuggler’s paradise.” Avalanche Studios, best known for the Just Cause series, had been developing the game using the next-generation version of its proprietary Apex Engine.
In an official statement posted shortly after Schreier’s report, Avalanche Studios shared the following:
“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 cancelation comes just weeks after Microsoft carried out widespread layoffs that impacted several Xbox development teams and led to the termination of multiple major projects. Contraband becomes one of the latest casualties in this ongoing internal reshuffle, which reportedly also affected projects like Perfect Dark.
Despite this setback, Xbox still retains high-profile partnerships, including its collaboration with Hideo Kojima. Schreier confirmed that Kojima’s mysterious horror title, OD, remains in active development. The game is being created in partnership with Xbox Game Studios and makes use of cloud technology to deliver what Kojima has described as “a totally new style of game—or rather, a new form of media.”
OD features an ensemble cast including Sophia Lillis, Hunter Schafer, and Udo Kier, with Kojima working alongside filmmaker Jordan Peele on the narrative. According to official descriptions, the game will explore psychological horror elements and focus on testing the limits of fear.
