Microsoft Cancels Perfect Dark Shuts Down Developer The Initiative in Widespread Xbox Cuts
The shadows have deepened at Xbox. Microsoft has reportedly pulled the plug on the Perfect Dark reboot, shuttering The Initiative studio amidst a wave of layoffs. The cuts haven’t stopped there, with whispers turning to screams as word comes that Rare’s ambitious Everwild project has been shelved. ZeniMax Online Studios, the team behind The Elder Scrolls Online, hasn’t escaped the purge either, with an unannounced MMO project axed before it could even see the light of day.
Microsoft Job Cuts Impact Xbox Division
Just months after Microsoft swallowed Activision Blizzard in a $69 billion deal, the gaming giant is shedding employees like leaves in autumn. This latest bloodletting marks the fourth round of layoffs in Microsoft’s gaming division since January 2024. The cuts, impacting over 9,000 employees nearly four percent of Microsoft’s workforce signal a drastic restructuring as the company slims down its operational framework. The question remains: is this strategic streamlining, or a worrying sign for the future of gaming at Microsoft?
The Xbox world is reeling from a brutal wave of layoffs. Bloomberg reports the cuts have slashed through the heart of the gaming giant, hitting studios behind some of its biggest franchises. Candy Crush creators King are reportedly shrinking by 10%, a blow to a casual gaming empire. But the impact doesn’t stop there. Call of Duty stalwarts Raven Software and Sledgehammer Games, the masterminds behind the Halo universe at Halo Studios, and the racing gurus at Forza Motorsport’s Turn10 Studios have all been affected. The exact number of casualties remains shrouded in uncertainty, but the 200-strong reduction at King paints a grim picture of widespread disruption.
Microsoft’s Xbox division has seen four rounds of layoffs since the Activision Blizzard-King acquisition Photo Credit: Reuters
Perfect Dark, Other Projects Cancelled
RememberPerfect Dark, resurrected like a phoenix at The Game Awards 2020? The Initiative, nestled in Santa Monica, took the reins, joined by Tomb Raider veterans Crystal Dynamics. We tasted the future with a slick gameplay trailer at the previous Xbox Games Showcase. But at the latest showcase? Radio silence. Joanna Dark’s return is shrouded in mystery once more.
The Initiative’s debut project became a magnet for elite talent, drawing veterans from gaming powerhouses like Sony’s Santa Monica Studio, Naughty Dog, and Rockstar Games. The studio’s pull grew even stronger last November when Brian Horton, formerly the creative director on Insomniac Games’ Marvel’s Wolverine, traded claws for code, joining The Initiative to spearhead the revival of Perfect Dark.
Microsoft has reportedly pulled the plug on Perfect Dark and Everwild, along with a host of hush-hush projects, insiders at Windows Central reveal. The grim reaper also swung its scythe at The Initiative, effectively shuttering the studio.
Subject: A New Chapter for Xbox Game Studios
An evolving landscape demands bold decisions. Xbox Game Studios is sharpening its focus, which means pivoting away fromPerfect DarkandEverwild, as well as sunsetting several unrevealed projects. This strategic realignment includes the difficult closure of The Initiative. Matt Booty shared this news with Xbox staff, emphasizing the commitment to future innovation and delivering exceptional gaming experiences. While these changes present challenges, they pave the way for a stronger, more agile Xbox, ready to seize new opportunities.
“These shifts, part of a larger recalibration across our organization, refocus our energies and resources to empower our teams in a dynamic industry. These weren’t easy calls; each project and team embodies countless hours of passion, innovation, and dedication.”
Xbox remains steadfast, despite recent workforce reductions. Phil Spencer reassured fans that the company’s core strategy endures, promising continued expansion for flagship franchises. Behind the scenes, Xbox Game Studios hums with activity, boasting over 40 projects currently in development. Impacted employees will receive comprehensive severance packages and career transition support. Microsoft is actively working to redeploy talent within its gaming division, seeking new opportunities for displaced staff across various teams.
Phil Spencer, Microsoft Gaming’s CEO, prepped Xbox staff for cuts by echoing Microsoft’s push to flatten management, promising a leaner, more agile future a vision soon overshadowed by Matt Booty’s confirmation of studio and project impacts.
“Even as our player base swells and our games library explodes with titles devoured for countless hours, we face a critical juncture. The strength we see today – a thriving platform, cutting-edge hardware, and a roadmap bursting with potential – is built on yesterday’s difficult choices. To secure our future, we must now, with unflinching resolve, prioritize the opportunities that promise the greatest impact.”
At Xbox Games Showcase last month, Phil Spencer promised a healthy slate of Xbox games in 2026 Photo Credit: Microsoft
Xbox Cuts and Change in Strategy
The ink is barely dry on the Activision Blizzard deal, and the shadow of layoffs already looms large over Xbox. Since Microsoft’s acquisition, the gaming giant’s division has faced increasing pressure, punctuated by repeated workforce reductions. A chilling wave swept through in January, impacting over 1,900 employees – a stark 8% of the gaming division, including freshly integrated Activision Blizzard staff. Casualties weren’t limited to personnel; Blizzard’s unannounced survival game became another victim, axed before it could even see the light of day. The message is clear: post-acquisition, Xbox is navigating turbulent waters, and not everyone is making it to shore.
The gaming world gasped in May 2024 when Microsoft abruptly shuttered three Bethesda-owned studios, including Tango Gameworks, the critically acclaimed creators ofHi-Fi Rush, and Arkane Austin, responsible forRedfall. The move, framed as a strategic pivot towards “priority games,” resulted in widespread layoffs. But the story doesn’t end there. Tango Gameworks found a new lifeline, snatched up by Krafton. Last month, the studio signaled its rebirth, confirming they’ve already begun hammering out ideas for their next project. The beat goes on.
Fresh off its historic Activision Blizzard acquisition, Microsoft’s Xbox division underwent a seismic shift in September 2024, shedding 650 roles in a cost-cutting move. But the aftershocks didn’t stop there. The gaming giant is boldly rewriting its Xbox playbook, pivoting away from its traditional console focus to champion services like Game Pass and cloud gaming. This strategic U-turn culminated in an unprecedented move: opening the floodgates and releasing first-party Xbox exclusives onto competitor platforms. This ripple effect started in 2024 and continues into 2025 with plans to unleash even more first-party titles, both new and classic, onto Sony’s PS5, blurring console lines in a way previously unimaginable.
Despite whispers of a hardware retreat, Xbox is doubling down. A freshly inked, multi-year pact with AMD signals a bold future, promising custom silicon powering the next generation of Xbox consoles. But the revolution extends beyond boxes: Microsoft envisions a gaming ecosystem unbound by devices or storefronts, with Windows poised to become the ultimate playground for gamers.
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