Microsoft Cancels Perfect Dark, Shuts Down Developer The Initiative in Widespread Xbox Cuts

Microsoft has cancelled the Perfect Dark reboot and shut down its first-party studio The Initiative as a part of widespread layoffs throughout the corporate which have hit the Xbox division arduous. The newest spherical of cuts has additionally impacted Bristish developer Rare, whose action-adventure title Everwild has additionally been cancelled. The Elder Scrolls Online developer ZeniMax Online Studios has additionally been affected by the retrenchment drive, with an unannounced MMO from the corporate cancelled, as effectively.

Microsoft Job Cuts Impact Xbox Division

This is the fourth spherical of layoffs at Microsoft’s gaming division for the reason that begin of 2024 — all going down after the Xbox father or mother accomplished its acquisition of gaming behemoth Activision Blizzard in October 2023 for over $69 billion. Microsoft’s newest reorganisation efforts will see almost 4 % of its whole workforce — over 9,000 staff — laid off as the corporate plans to skinny down its organisational layers.

As per Bloomberg, the layoffs have lower deep into the Xbox division, impacting Candy Crush developer King, Call of Duty makers Raven Software and Sledgehammer Games, Halo Studios, and Forza Motorsport developer Turn10 Studios. The variety of individuals impacted in the gaming division is unclear, however King is reportedly decreasing its employees by 10 % — round 200 staff.

Microsoft’s Xbox division has seen 4 rounds of layoffs for the reason that Activision Blizzard-King acquisition
Photo Credit: Reuters

Perfect Dark, Other Projects Cancelled

The Perfect Dark reboot was revealed at The Game Awards 2020 and was in the works at Santa Monica-based The Initiative, with Tomb Raider studio Crystal Dynamics co-developing. The stealth motion sport additionally acquired a first-look gameplay trailer finally yr’s Xbox Games Showcase however was conspicuous by its absence on the 2025 version of the occasion final month.

The Initiative, which was engaged on its first mission, had attracted veteran employees from studios like Sony’s Santa Monica Studio, Naughty Dog and Rockstar Games. Last yr in November, Insomniac Games’ Brian Horton, who then served because the inventive director on Marvel’s Wolverine, reportedly left the studio to hitch The Initiative to steer Perfect Dark.

In an inside e-mail seen by Windows Central, Microsoft stated Wednesday it was cancelling Perfect Dark and Everwild, amongst different unannounced initiatives, and shutting down The Initiative.

“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,” Xbox Game Studios head Matt Booty stated in the e-mail to Xbox employees.

“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.”

Booty stated Xbox’s total technique would stay unchanged and its “biggest franchises” would proceed to develop. The government stated Xbox Game Studios had over 40 initiatives in lively growth. Staff members affected by the layoffs might be supplied severance and profession transition help. Microsoft may even try to put some laid-off staff in roles obtainable throughout different groups in the gaming division, the Xbox Game Studios chief stated in his e-mail.

Before Booty’s message confirming affected studios and initiatives, Microsoft Gaming CEO Phil Spencer advised Xbox employees that the division was following Microsoft’s lead in decreasing managerial layers to grow to be extra agile and environment friendly and guarantee success in the long run.

“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,” Spencer stated in an inside memo seen by IGN. “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.”

At Xbox Games Showcase final month, Phil Spencer promised a wholesome slate of Xbox video games in 2026
Photo Credit: Microsoft

Xbox Cuts and Change in Strategy

Layoffs at Xbox have grow to be an everyday incidence since Microsoft finalised its takeover of Call of Duty maker Activision, growing scrutiny on the corporate’s gaming division. Last yr in January, Microsoft laid off over 1,900 Xbox staff, together with employees on the then newly acquired Activision Blizzard unit — about eight % of the general gaming division workforce. The Xbox father or mother additionally cancelled an unannounced survival sport in the works at Blizzard on the time.

In May 2024, Microsoft introduced it was shutting down three of its Bethesda-owned sport studios, together with Hi-Fi Rush developer Tango Gameworks and Redfall maker Arkane Austin, to shift focus to its “priority games”. The closures led to “significant layoffs” on the studios affected. Tango was later acquired by Krafton, and the studio confirmed final month that it had begun early work on its subsequent mission.

In September 2024, the tech big laid off 650 staff on the Xbox division to rein in prices following the acquisition of Activision. Since the corporate closed the largest deal in gaming historical past, it has additionally shifted its core Xbox technique to de-emphasize the house console and prioritise Xbox providers like Game Pass and cloud gaming. In 2024, Microsoft additionally started releasing its first-party Xbox exclusives on rival platforms, a strategic pivot that has continued into 2025. The firm plans to launch extra of its first-party video games, each new and previous, on Sony’s PS5.  

Xbox, nonetheless, isn’t turning away from the {hardware} enterprise. Last month, the corporate introduced it had signed a multi-year settlement with AMD to co-develop chips for its slate of future units, together with the next-generation Xbox consoles. Microsoft stated that its next-gen Xbox expertise wouldn’t be locked to a single retailer or system, and it could give attention to making Windows “the number one platform for gaming”.