Microsoft has stopped development on two major Xbox game projects, Perfect Dark and Everwild, and is closing the studio behind Perfect Dark, The Initiative. This move is part of broader layoffs affecting about four percent of Microsoft’s global workforce.
Studio Closure Tied to Game Cancellations
The decision was confirmed in a memo from Matt Booty, head of Xbox Game Studios. According to the memo, the cancellation of Perfect Dark and Everwild led to the closure of The Initiative. Booty also mentioned that several other unannounced projects across Microsoft’s gaming portfolio would be wound down, The Verge reported.
Also read: Self-Regulation in Action: How Probo’s Safety Features Promote Responsible Gaming
The Initiative was created by Xbox in 2018 with the goal of reviving the Perfect Dark series. The game was to be co-developed with Crystal Dynamics, a studio known for the Tomb Raider series. Perfect Dark, a first-person shooter originally developed by Rare for the Nintendo 64 in 2000, had its reboot’s first gameplay shown in 2024. However, the game did not appear in Microsoft’s June 2025 showcase, where it had been expected to feature prominently.
Everwild Development Also Halted
Everwild, a game by Rare announced in 2019, also faced development challenges. The project was restarted from scratch in 2021, but it is now also being cancelled. Rare itself remains active despite the recent changes.
These cancellations come amid a larger pattern of layoffs and restructuring within Microsoft’s gaming division. Since acquiring Activision Blizzard for $69 billion, Microsoft has repeatedly cut jobs. The company laid off 1,900 employees in January 2024, closed studios like Arkane Austin and Tango Gameworks shortly after, and reduced staff again in September 2024 by 650 employees. In May 2025, Microsoft cut an additional 6,000 jobs, equal to about three percent of its entire workforce. This recent round marks the fourth major layoff affecting Microsoft’s gaming operations in 18 months.
{{/usCountry}}These cancellations come amid a larger pattern of layoffs and restructuring within Microsoft’s gaming division. Since acquiring Activision Blizzard for $69 billion, Microsoft has repeatedly cut jobs. The company laid off 1,900 employees in January 2024, closed studios like Arkane Austin and Tango Gameworks shortly after, and reduced staff again in September 2024 by 650 employees. In May 2025, Microsoft cut an additional 6,000 jobs, equal to about three percent of its entire workforce. This recent round marks the fourth major layoff affecting Microsoft’s gaming operations in 18 months.
{{/usCountry}}Also read: Nintendo sells record 3.5 million Switch 2 consoles in four days
Industry reports indicate that other Xbox studios may also face job cuts. For example, Raven, known for the Call of Duty franchise, and Turn 10, the developer behind Forza Motorsport, are also rumoured to be reducing staff. These moves come as Microsoft prepares to release next-generation Xbox consoles and maintain a strong presence at major gaming events like Gamescom.