Microsoft cancels 3 games as layoffs impact Xbox team and its gaming studios

Microsoft has cancelled three major game titles following a wave of layoffs that affected its Xbox division and gaming studios. This move has surprised both players and developers. It also signals a major shift in how the tech giant plans to handle its gaming portfolio.

Three Games Pulled from Development

The most talked-about cancellation is the reboot of Perfect Dark. The Initiative, a high-profile Xbox studio, led the project in partnership with Crystal Dynamics. Despite years of development, Microsoft pulled the plug before the game could reach beta.

Next comes Everwild, an original title from Rare. First revealed in 2019, the game promised a magical, nature-driven world. However, it stayed stuck in the concept stage for years. Microsoft finally ended the project after internal delays and creative changes.

The third title was an unannounced MMORPG from ZeniMax Online Studios. Codenamed “Blackbird,” the project never made it to the public. It aimed to compete with top-tier online games but got cancelled during early planning.

Layoffs Shake Core Teams

These game cancellations came alongside heavy job cuts. Microsoft let go of around 9,000 employees worldwide, and the Xbox division was hit hard. The Initiative, the team behind Perfect Dark, has shut down completely. The studio operated since 2018 but never released a single game.

Turn 10 Studios, known for the Forza Motorsport series, also suffered. Reports suggest the team lost nearly half of its workforce. Rare, ZeniMax, and Call of Duty support studios like Raven and Sledgehammer also experienced layoffs.

Even King, the mobile game developer behind Candy Crush, wasn’t spared. About 200 employees lost their jobs, marking a 10% cut in staff.

Microsoft Refocuses Its Strategy

Phil Spencer, CEO of Microsoft Gaming, explained the decision. He said the company wants to focus on fewer projects with greater impact. “We remain committed to gaming,” he noted, “but we must make tough choices to align with long-term goals.”

Microsoft has spent years acquiring studios and investing in new IPs. But now, it appears the company wants to streamline its operations. Instead of many medium-sized projects, it may concentrate on a few blockbuster titles.

Community and Developer Reaction

Gamers quickly reacted online, sharing disappointment and concern. Many looked forward to Perfect Dark and Everwild, and the sudden cancellations sparked anger. On Reddit, one user said, “Seven years and not one game to show? That’s just heartbreaking.”

Developers also voiced frustration. Some questioned the leadership’s ability to manage studio growth. Others raised concerns about job security in the industry. “We worked hard for years,” one anonymous developer shared. “And now, all that effort is gone with no warning.”

What’s Next for Xbox?

Microsoft now faces pressure to deliver strong results with the projects that remain. Titles like Fable, Avowed, and Hellblade II are still in development. Their performance could define Xbox’s future in a competitive market.

The company will need to rebuild trust. Gamers want clear communication and consistent releases. Developers need stability and direction. Xbox leadership insists that Phil Spencer will stay in charge, but fans and employees alike are watching closely.

Industry Context

This isn’t an isolated case. The gaming industry has seen over 15,000 layoffs so far in 2025. Tech firms are cutting costs and narrowing their focus. Microsoft’s decision reflects a broader shift happening across the entire sector.

While Xbox Game Pass continues to grow, the brand hasn’t matched Sony’s dominance in exclusive titles. Microsoft must now prove that its leaner strategy can still deliver quality experiences and restore confidence among players.

Final Thoughts

Microsoft’s latest cuts mark a turning point. The cancelled games, especially Perfect Dark and Everwild, represent lost potential. More importantly, the layoffs remind us that behind every cancelled title are talented people whose careers have been disrupted.

The road ahead for Xbox isn’t easy. With fewer studios and tighter plans, the platform must prove it can still innovate. If the remaining titles hit the mark, Microsoft may come out stronger. But if they fall short, the company risks losing more than just fans — it could lose its identity in gaming.