Microsoft Announces Major Layoffs, Impacting Xbox Division
In a surprising corporate development, Microsoft has revealed significant layoffs affecting approximately 9, 000 employees, which constitutes around 4% of its global workforce. Among the divisions impacted, Microsoft’s gaming segment—particularly its Xbox division—faces considerable restructuring, setting the stage for troubling news regarding various projects and studios.
According to an internal communication acquired by Windows Central, Matt Booty, the head of Xbox Games Studios, confirmed the layoffs, alongside project cancellations and the closure of a studio.
The Initiative Studio Closure
Notably, The Initiative, a first-party studio established seven years ago, is shutting down without delivering any completed titles. The studio’s ambitious first project, a reboot of the classic game Perfect Dark, was in collaboration with Crystal Dynamics but has now been scrapped along with the studio itself. In light of the layoffs, Microsoft has encouraged the affected developers to seek new opportunities within the company.
“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, ”said Booty in the email.“We did not make these choices lightly, as each project and team represent years of effort, imagination, and commitment.”
Everwild and Other Cancellations
Additionally, the previously anticipated game Everwild, developed by Rare, has also met the axe. First unveiled in 2019, this title had experienced numerous developmental hurdles, including reports of being rebooted at least once prior to its cancellation.
More Cancellations within Microsoft
Furthermore, Jason Schreier from Bloomberg has reported that Zenimax Online’s unannounced MMORPG project, codenamed Blackbird, which had been in development since 2018, has also been axed.
Booty emphasized, “Our overall portfolio strategy is unchanged: to build games that excite our players, continue to grow our biggest franchises, and create new stories, worlds, and characters. We currently have over 40 projects in active development, ongoing momentum with titles scheduled for release this fall, and a robust lineup heading into 2026.”
Broader Impact on Gaming Studios
In a broader context, layoffs are not confined to Microsoft alone. Reports indicate that approximately 10% of staff at mobile game developer King will be let go, and Turn 10, the team behind Forza Motorsport, could see staff reductions by as much as 50%.Raven Software, the studio responsible for the Call of Duty franchise, is also rumored to be experiencing layoffs. More concrete details regarding the exact job losses and project cancellations are expected to emerge in the forthcoming days.
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