Microsoft is laying off approximately 9,000 employees—nearly 4% of its global workforce—as part of a broader corporate restructuring. The gaming division has been hit particularly hard, with several high-profile projects cancelled and at least one studio shut down. Among the most notable casualties are Perfect Dark and Everwild, both of which have officially ceased development. In addition, The Initiative, the studio behind Perfect Dark, will be closing its doors.
Phil Spencer, CEO of Microsoft Gaming, explained the company’s reasoning in an internal memo, stating: “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.” The restructuring aims to streamline operations by reducing management layers and redirecting focus toward long-term growth.
Matt Booty, head of Xbox Game Studios, confirmed the end of Perfect Dark and Everwild in a separate internal email. “We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio,” he wrote. Perfect Dark, a reboot of the classic first-person shooter, had been in development since 2018. Meanwhile, Everwild, a new IP from Rare, faced repeated development challenges and multiple reboots since its 2019 announcement.
Other affected projects include Blackbird, an unannounced MMORPG from ZeniMax Online Studios, which had been in development since 2018. Described as a spiritual successor to Elder Scrolls Online, the title’s cancellation was reported by Bloomberg’s Jason Schreier.
Multiple studios across Microsoft’s gaming division have experienced job cuts. Turn 10 Studios, creators of Forza Horizon, reportedly laid off over 70 staff members. Around 200 employees were affected at King’s Stockholm office—roughly 10% of the Candy Crush developer’s workforce—following Microsoft’s acquisition of Activision Blizzard in 2023. Halo developer 343 Industries also saw layoffs, though it remains active, with a team of 200–300 people still working on future Halo entries. Raven Software, known for its work on the Call of Duty franchise, was similarly impacted.
Despite the sweeping changes and project cancellations, Microsoft has stated that all titles presented during its Xbox Games Showcase in June 2025 are still in active development.
