Microsoft Layoffs Impact Gaming Division

Microsoft is undergoing significant layoffs, cutting approximately 9,000 employees, which represents almost 4% of its global workforce. This decision is part of a larger effort to restructure the company. The gaming branch has felt the brunt of these cuts, resulting in the cancellation of several anticipated titles and the shuttering of at least one studio.

Restructuring Plans from Microsoft Gaming

In a memo that was initially released by Variety, Phil Spencer, the CEO of Microsoft Gaming, outlined the company’s strategy to prioritize growth areas and streamline its organisational framework by eliminating management levels. The goal, as stated, is to create a sustainable future for the gaming division while concentrating on strategic growth segments.

Impact on Upcoming Game Titles

The layoffs have led to notable project cancellations, including Perfect Dark and Everwild, both of which were highly awaited by fans. In another internal communication, Matt Booty, the head of Xbox Game Studios, indicated that work on these two games has been halted. He confirmed the cessation of development for Perfect Dark and Everwild, alongside the winding down of several unannounced projects across Microsoft’s gaming catalog.

Details on Perfect Dark and Everwild

Perfect Dark was a revival of the classic first-person shooter franchise, originally hinted at during an Xbox Games Showcase back in 2024. Development efforts had been in place since the formation of The Initiative in 2018. In contrast, Everwild, a fresh intellectual property from Rare, the developers of Sea of Thieves, has experienced a rocky development path since its announcement in 2019, undergoing several reboots over recent years.

Further Project Cancellations

Another game to face the axe is Blackbird, an unannounced MMORPG from ZeniMax Online Studios, known for its work on Elder Scrolls Online. As reported by Bloomberg’s Jason Schreier, Blackbird had been in development since 2018 and was envisioned as a successor to ESO, though information about the game remains sparse.

Effects on Other Studios

Additional Microsoft-owned studios have also seen job losses. Reports indicate that around five employees from Halo’s 343 Industries were let go. Despite these layoffs, the studio is still believed to be developing new entries in the Halo series, although its workforce now stands between 200 and 300 personnel.

Furthermore, Turn 10 Studios, the creators of Forza Horizon, reportedly dismissed over 70 employees. King, famously known for Candy Crush and acquired during Microsoft’s 2023 Activision Blizzard deal, is downsizing approximately 10% of its workforce, affecting around 200 staff members in its Stockholm office.

Raven Software, renowned for its contributions to Call of Duty titles such as Black Ops Cold War and the forthcoming Black Ops 6, has also experienced significant layoffs.

Commitment to Ongoing Development

Despite these cancellations and job cuts, Microsoft has reassured players that all games presented during the Xbox Games Showcase in June 2025 will continue to be developed.