Mass Xbox Layoffs Begin, Rare Game Everwild and Zenimax MMORPG Both Reportedly Cancelled

Update #4 [Wed 2nd Jul 2025, 6:10pm]: Regrettably, the most significant news of the day originates from Perfect Dark creator The Initiative. Confirmed in an internal correspondence from Matt Booty that has been made accessible by Windows Central, the espionage title has been scrapped and the developer is closing down.

Matt Booty remarked:

We have reached the conclusion to halt the development of Perfect Dark and Everwild, in addition to wrapping up several unannounced initiatives across our portfolio. As part of this, we are shutting one of our studios, The Initiative. These choices, along with other modifications across our teams, mirror a larger effort to recalibrate priorities and concentrate resources to equip our teams for enhanced success within an evolving industry context. We did not arrive at these decisions lightly, as every project and team embodies years of labor, creativity, and dedication.

Update #3 [Wed 2nd Jul 2025, 5:50pm]:

In another update from Bloomberg reporter Jason Schreier, it is reported that Forza Motorsport developer Turn 10 Studios has been significantly impacted by Microsoft’s round of layoffs, with nearly 50% of the workforce losing their positions. Additionally, Call of Duty teams Raven Software and Sledgehammer Games are said to have experienced reductions.

Update #2 [Wed 2nd Jul 2025, 4:15pm]:

Bloomberg journalist Jason Schreier discloses that a second game has been axed amid the wave of Xbox layoffs. He asserts an MMORPG from Zenimax Online Studios (the team behind The Elder Scrolls Online), which has been in the works since 2018, is no longer in development.

Update #1 [Wed 2nd Jul 2025, 3:10pm]:

According to VGC, sources inform the outlet that the UK studio Rare has felt the impact of the layoffs, resulting in the long-anticipated Everwild being scrapped. While this project wasn’t announced for PS5, there was a strong possibility of a port had the game made it to release.

Original Story: The substantial layoffs affecting the Xbox division — initially reported earlier this week — have now commenced, reports Bloomberg journalist Jason Schreier.

In a new piece, Schreier claims that King, the creator behind Candy Crush, is eliminating 10% of its workforce, approximating to around 200 positions. Additionally, some staff at Zenimax have also been notified of their layoffs. Zenimax is the parent company of Starfield, Fallout, and The Elder Scrolls developer Bethesda.

Xbox employees within the USA are anticipated to learn about job cuts later today.

Layoffs are impacting the entirety of Microsoft today, with up to 9,100 individuals being let go across the entire organization, as stated by The Seattle Times.

Via Windows Central, an internal email circulated to employees has been disclosed. Composed by Xbox chief Phil Spencer, he conveyed to staff: “Today we are communicating decisions that will impact colleagues throughout our organization. To position Gaming for long-lasting success and permit us to concentrate on strategic growth areas, we will terminate or decrease operations in certain sectors of the business and adhere to Microsoft’s example in removing tiers of management to enhance agility and efficiency.”

Spencer mentions he acknowledges that these layoffs are occurring at a moment when Xbox has “more players, games, and gaming hours than ever previously,” yet choices need to be made for sustained success:

I recognize that these adjustments come at a period when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game trajectory have never appeared stronger. The achievement we are currently experiencing is based on rigorous decisions we’ve previously executed. We must make choices now for ongoing success in the forthcoming years, and a crucial element of that strategy is the discipline to prioritize the most robust opportunities. We will safeguard what is thriving and focus efforts on areas with the maximum potential, while delivering on the expectations the company has for our business. This concentrated approach enables us to provide outstanding games and experiences for players for generations to come.

He subsequently expresses gratitude to those who are losing their jobs due to today’s layoffs:

Prioritizing our opportunities is crucial, but that does not diminish the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are affected. These choices are not a reflection of the talent, creativity, and commitment of the people involved. Our momentum is not coincidental—it is the product of years of dedicated effort from our teams.

Following the resolution to port Xbox titles to PS5 and Nintendo Switch, the hardware manufacturer has become more of a third-party gaming entity than ever before. Consequently, potential studio closures can impact future PS5 releases. As this is an evolving narrative, there will unfortunately be ongoing updates throughout the day about more individuals losing their jobs and even possible studio shutdowns.