Microsoft is scrapping two upcoming video games, a reboot of “Perfect Dark” and the fantasy title “Everwild,” in addition to ending development on several unannounced projects.
These decisions are the resulting impacts of a sweeping round of layoffs totaling more than 9,000 employees at Microsoft worldwide. As part of the cuts, Microsoft Gaming has shuttered studio The Initiative, which was the developer on the “Perfect Dark” reboot (a game that has been in the works for nearly seven years), marking the the only studio closed at Microsoft Gaming and Xbox in this round, Microsoft has confirmed. Rare, the studio behind the now-scrapped game “Everwild,” which has been in development for approximately 10 years, is not being closed.
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While these are the most recent layoffs to hit the video game industry, Microsoft is far from the only company to make sweeping cuts to its gaming teams over the past year, including direct competitor Sony’s PlayStation, which has undergone five rounds of layoffs in last two years and closed three studios.
Currently, Xbox has more than 40 projects in active development, per a memo sent to Microsoft Gaming staff from Xbox Game Studios chief Matt Booty on Wednesday.
A source close to the situation has told Variety that every game featured at Xbox Games Showcase presentation in June is continuing on.
See below for Booty’s full memo to staff, obtained by Variety, announcing changes across Xbox Game Studios.
Following Phil’s note, I want to share more about the changes to the Studios business units.
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. 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.
Our overall portfolio strategy is unchanged: build games that excite our players, continue to grow our biggest franchises, and create new stories, worlds, and characters. We have more than 40 projects in active development, continued momentum on titles shipping this fall, and a strong slate headed into 2026.
For those directly affected, we are working closely with HR and studio leadership to provide support, including severance, career transition assistance, and where possible, opportunities to explore roles on other teams.
To everyone across our studios: thank you. Your creativity and resilience continue to define who we are. I believe in the strength of our teams and the direction we’re taking on the path ahead.
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