Microsoft is laying off around 9,000 employees, nearly 4% of its global workforce, as part of a broader restructuring effort. The cuts have significantly impacted its gaming division, leading to the cancellation of several high-profile titles and the closure of at least one studio.
In an internal memo first published by Variety, Phil Spencer, CEO of Microsoft Gaming, said the company is taking steps to focus on strategic growth areas and simplify its organisational structure by reducing management layers. “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,” Spencer wrote.
Among the most notable consequences of the layoffs is the cancellation of Perfect Dark and Everwild, two highly anticipated titles. In a separate internal email, Xbox Game Studios head Matt Booty confirmed that work on both projects had ceased. “We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio,” Booty wrote, adding that the studio behind Perfect Dark, The Initiative, will also be shut down.
Perfect Dark was a reboot of the classic first-person shooter series, first teased during an Xbox Games Showcase in 2024. Development on the title had been underway since The Initiative was formed in 2018. Meanwhile, Everwild, a new IP from Sea of Thieves developer Rare, has had a troubled development cycle since being announced in 2019, reportedly undergoing multiple reboots over the past decade.
Another casualty of the cuts is Blackbird, an unannounced MMORPG from ZeniMax Online Studios, the creators of Elder Scrolls Online. According to Bloomberg’s Jason Schreier, the game had been in development since 2018 and was envisioned as a spiritual successor to ESO. Details remain limited.
Other Microsoft-owned studios have also been affected. Engadget reported that around five employees at Halo developer 343 Industries were laid off. While the studio is still believed to be working on future entries in the Halo franchise, it currently employs between 200 and 300 people.
Forza Horizon developer Turn 10 Studios reportedly let go of more than 70 staff members, while King, the Candy Crush maker acquired as part of Microsoft’s 2023 Activision Blizzard deal, is cutting approximately 10% of its workforce, impacting around 200 employees in its Stockholm office.
Raven Software, best known for its work on Call of Duty titles such as Black Ops Cold War and the upcoming Black Ops 6, has also been hit with job losses.
Despite the cancellations, Microsoft has confirmed that all games showcased during its Xbox Games Showcase in June 2025 will continue development.
