Microsoft's recent workforce reduction has led to the cancellation of several high-profile games including Perfect Dark and Everwild. The sweeping changes come as Xbox restructures its development priorities following significant acquisitions.

Microsoft's Gaming Division Restructures Amid Major Layoffs

Rare Creative Director Departs Following Everwild Cancellation

Microsoft confirmed on July 2nd it would eliminate approximately 9,000 positions across its gaming divisions, including the discontinuation of Rare's much-anticipated Everwild project. Xbox Game Studios chief Matt Booty explained the difficult decisions in an internal memo obtained by Windows Central.

"These strategic adjustments reflect our commitment to aligning resources with evolving industry demands," Booty stated regarding the restructuring.

The cancellation prompted the departure of Rare's longtime creative lead Gregg Mayles after 35 years. The industry veteran contributed to numerous classic titles including Banjo-Kazooie and Sea of Thieves. Executive Producer Louise O'Connor also exited alongside him.

Despite Phil Spencer's February 2025 comments about steady progress, the nearly decade-long Everwild project joins Xbox's growing list of shelved initiatives. "We recognize these decisions impact years of dedication and creativity," Booty acknowledged regarding the cancellations.

The Initiative Shutdown Ends Perfect Dark Revival

The layoffs also claimed Perfect Dark's ambitious reboot project, along with the closure of The Initiative studio established in 2018 specifically for the title. The futuristic FPS reboot had generated significant anticipation since its 2020 announcement and 2024 gameplay showcase.

Widespread Impact Across Microsoft Studios

Beyond these major cancellations, the cuts affected numerous Microsoft-owned studios. ZeniMax Online Studios canceled an unannounced project while reducing staff by 10%, with ripple effects reaching Halo, Forza, and Call of Duty development teams.

Spencer emphasized these measures aim to ensure long-term stability: "We must make difficult choices today to sustain our position in a changing market." The statement follows Microsoft's $69 billion Activision acquisition in October 2023, which increased pressure on gaming division profitability.