MercurySteam confirms layoffs after Blades of Fire release

MercurySteam has joined the layoff wave even though its name carries real weight. The Spanish studio behind Metroid Dread and Blades of Fire said on May 12, 2026 that it had begun a “workforce adjustment process,” but it did not say how many employees would be affected.

That silence matters because MercurySteam is not an unproven outfit hanging on by a thread. The studio was founded in May 2002 by former Rebel Act Studios developers and is based in San Sebastián de los Reyes, outside Madrid. When Nordisk Games bought a 40% stake in December 2020, it said MercurySteam had more than 160 employees, a sign of a company that had already grown well beyond the size of a boutique team.

The timing points back to Blades of Fire. MercurySteam and 505 Games launched the dark fantasy action-adventure on May 22, 2025 for Epic Games Store, PlayStation 5 and Xbox Series X|S, with a Steam release listed for May 14, 2026. 505 Games has described the game as a weapons-forging, deliberate-combat action project, and Digital Bros said in 2025 that Blades of Fire underperformed expectations. That does not prove the layoffs were caused by the game alone, but it does explain why the move lands as more than routine churn.

MercurySteam’s back catalog shows why the cuts sting. Metroid Dread arrived on Nintendo Switch on October 8, 2021 and went on to become the best-selling game in the Metroid franchise. The studio has also been tied to Metroid: Samus Returns and the Castlevania: Lords of Shadow series, credits that made MercurySteam one of the more visible European action-game teams working with major publishers and platform holders.

Even with that track record, the layoff decision fits a brutal pattern across the business: shipping a recognized game is no longer enough on its own if the project cycle, margins, and publisher math do not line up. MercurySteam’s latest move shows how exposed mid-sized studios remain, even when they have shipped marquee hits, partnered with big names like 505 Games and Nintendo, and built a reputation that should have looked safer than this.