Microsoft has initiated yet another wave of layoffs, this time targeting its Xbox gaming division, as well as other areas of the company. Many studios under the company’s banner have been gutted as part of this move, and The Initiative, which had been working on a reboot of Perfect Dark, has been shut down entirely. Per various reports, around 9,000 people are believed to have lost their jobs, representing around 4% of the company’s global workforce.
A range of other projects have also reportedly been cancelled as part of the company restructuring, including many long-in-development, highly anticipated games. Rare’s Everwild has been cancelled, despite the excitement around this game and reports in October 2024 describing development as ‘going well.’
A new MMORPG from The Elder Scrolls Online developer ZeniMax Online Studios has also reportedly been cancelled, after several years in development. As part of changes at the studio, long-time executive Matt Firor is also departing, bringing an 18-year tenure to a close.
Additionally, several other, unannounced games are believed to have been cancelled as part of these layoffs.
Elsewhere, significant cuts have reportedly changed the landscape at King, Raven Software, Turn 10 Studios, Rare, High Moon, Sledgehammer Games, and more. Microsoft’s decision will have far-reaching impact worldwide, with many employees – including tenured staff – now in the process of being laid off, or transitioning to new roles, in a studio environment with a reduced headcount.
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In a memo sent to staff, Microsoft Gaming CEO Phil Spencer described the changes as necessary for the ‘enduring success’ of the company. In the memo, he also confirmed the layoffs have been initiated at a time when the company has ‘more players, games, and gaming hours than ever before’ and its ‘platform, hardware, and game roadmap have never looked stronger.’
Per Spencer, despite Microsoft’s current success, more change is needed to ensure a robust strategy moving forward.
‘We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritise the strongest opportunities,’ Spencer said. ‘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.’
Notably, this statement arrives just months after Microsoft initiated sweeping layoffs in other divisions, with major cuts already impacting thousands of other staff in 2025.
In a statement provided to ScreenHub, a Microsoft spokesperson said: ‘We continue to implement organisational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace.’
As always in cases like these, our thoughts are with those developers who have had projects cancelled, and those who are now re-entering an incredibly tough jobs market, at a time when stable video game jobs are becoming scarcer than ever.
