Microsoft’s Xbox Layoffs: Perfect Dark Reboot and Everwild Cancelled

It’s a grim day for Microsoft, especially for Xbox. Major changes have been announced as hundreds of jobs were lost in the latest wave of layoffs across Microsoft’s divisions. The gaming sector was significantly affected, with news that The Initiative, the studio working on the Perfect Dark reboot (first revealed in 2020), is officially shutting down, and the project has been cancelled.

Also cancelled is Everwild, Rare’s upcoming new IP announced back in 2019. Rare is a studio known for Sea of Thieves.

Xbox Game Studios Statement

Here’s the statement from Xbox Game Studios, Matt Booty, regarding the two projects and The Initiative’s closure.

“We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio. As part of this, we are closing one of our studios, The Initiative. These decisions, along with other changes across our teams, reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape. We did not make these choices lightly, as each project and team represent years of effort, imagination, and commitment.”

Phil Spencer’s Note to Employees

Windows Central shared the note released by Microsoft Gaming CEO Phil Spencer:

”Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days."

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we're seeing currently is based on tough decisions we've made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.

Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.

HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.

Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.”

Massive layoffs across the board

The Xbox division was just hit in those areas as the company's latest wave of massive layoffs hit other parts of the gaming division. According to a report from Bloomberg, several major studios were affected, including King, ZeniMax, Raven Software, Sledgehammer Games, Halo Studios, and Turn 10 Studios.

It’s reported that King is losing around 10% of its workforce, roughly 200 jobs.

For Turn 10 Studios, the team behind Forza Motorsport, it is said that around 50% of the studio’s staff has been laid off, a significant blow to the developer.

ZeniMax Media was also hit with layoffs (no exact numbers), and their upcoming MMORPG project (code-named Blackbird) has reportedly been cancelled. They have been working on that project since 2018.

Insider-gaming also reports that Call of Duty studios were affected by this wave, with at least Raven Software and Sledgehammer Games impacted. However, exact numbers were not disclosed.

This marks Microsoft’s fourth major layoff in the last two years.

• January 2024: Activision Blizzard King was hit the hardest.

• May 2024: Microsoft closed Arkane Austin and Tango Gameworks (later reopened under Krafton).

• September 2024: Roughly 650 employees were laid off, again mostly from Activision Blizzard King.

Microsoft’s ongoing restructuring signals a clear shift in strategy and further cost-cutting, but it comes at the cost of hundreds of jobs and several promising projects. It is said that across the whole company, we can see close to 9,000 jobs affected across all divisions within Microsoft, not just gaming.

More soon as reports come in.

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