Microsoft’s layoffs have impacted several Xbox teams and first-party games.
Microsoft has officially begun laying off workers this week, following confirmation that the company was planning to lay off more than 9,000 employees globally. These layoffs have severely affected several teams and divisions within Xbox Game Studios, leading to the cancellation of several in-development games along with workforce reductions.
According to a memo sent out by Xbox head Phil Spencer (via Insider Gaming), these cuts are being made “To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.”
Over the last 24 hours, news has slowly dripped in regarding all the Xbox games and studios affected by these layoffs. Here’s everything we know so far:
The Initiative gets shut down, Perfect Dark reboot cancelled
The Initiative, a first-party game studio first formed in 2018, has officially been shut down. The company was working on a reboot of the Perfect Dark game franchise, also titled Perfect Dark, which has also been cancelled completely as a result of the layoffs. Perfect Dark was an action-adventure shooter that notably showed off a gameplay reveal in 2024, featuring protagonist Joanna Dark in a reimagined version of Perfect Dark’s sci-fi world.
Sea of Thieves director leaves Rare, Everwild cancelled
Sea of Thieves and Banjo-Kazooie game developer Rare has also been impacted by these layoffs. Its action-adventure game Everwild, which was first announced in 2019, was cancelled this week. Its game director Gregg Mayles (who also directed Sea of Thieves) and executive producer Louise O’Connor have been confirmed to have departed the company.
The Elder Scrolls Online’s new MMORPG gets cancelled
The Elder Scrolls Online developer Zenimax Online Studios’ next MMORPG project, codenamed Blackbird, has been cancelled. The game was in development since 2018, according to Bloomberg’s Jason Schreier. According to Schreier, the mass Xbox layoffs saw members of Zenimax Online Studios get abruptly “locked out” of their Slack work accounts, with no word on whether their jobs have been cut or retained.
Additionally, Zenimax Online Studios’ president, Matt Firor, is leaving the studio after 18 years. The exact number of other employees affected at Zenimax Online Studios is currently unknown.
Candy Crush maker King hit by layoffs
Xbox’s mobile gaming publisher King has cut 10% of its staff, amounting to some 200 jobs, according to Bloomberg. The developer is known for making the Candy Crush franchise.
Call of Duty developers Raven Software, High Moon and Sledgehammer Games hit by layoffs
Two game developers behind the Call of Duty franchise have been affected by layoffs. Raven Software, which co-developed multiple Call of Duty games including Call of Duty: Modern Warfare (2019) and the upcoming Call of Duty: Black Ops 7, has seen some unspecified workforce reductions.
Additionally, Sledgehammer Games, the developer of Call of Duty: Vanguard and Call of Duty: Modern Warfare III, has been hit by layoffs as well. The same goes for High Moon Studios, which helped with development on Call of Duty: Warzone, according to Charlie Intel. The nature and number of employee layoffs made in both studios is currently unknown.
Halo Studios hit by layoffs
Halo Studios, a game developer formerly known as 343 Industries, has seen an unspecified number of job cuts. The developer had previously stated that it would show fans “the official scoop on what Halo Studios has been working on” during this year’s Halo World Championship, which runs from 24–26 October, 2025.
Forza Motorsport maker Turn 10 Studios hit by layoffs
Turn 10 Studios, known for stewarding the Forza Motorsport franchise, has also been hit by significant layoffs. According to Schreier, the studio saw “nearly 50% of staff” laid off this week.
Blizzard ends support for Warcraft Rumble
Blizzard Entertainment announced this week that it is ending support of Warcraft Rumble, a mobile tower defense game first launched in 2023. The developer will “continue supporting Rumble with updates focused on regular, systemic in-game events and bug fixes, but no new content.”
The company explained that “Rumble has struggled to find its footing relative to our ambition for its long-term success, and for some time now the team has been listening to player feedback, refocusing in certain areas, and exploring different options. Some of that work showed signs of progress, but ultimately wasn’t enough to put the game on a path to sustainability.”
Senior software engineer AJ Davis noted he had been impacted by layoffs at Blizzard along with “most of the Warcraft Rumble team.”
Xbox’s user research team impacted by layoffs
According to The Verge’s Tom Warren, “nearly half” of Xbox’s user research team, which focuses on quality control across Xbox games, platforms, and developer tools, has been affected by these layoffs. The product lead and domain expert for Xbox’s family and child safety initiative was also laid off, according to a Linkedin post.
State of Decay maker Undead Labs hit by layoffs
Kotaku reporter Ethan Gach reports that State of Decay maker Undead Labs has been impacted by layoffs, though the extent of these layoffs is currently unclear. The developer is now working on State of Decay 3, though the game has no release date.
