Microsoft opened Wednesday morning with news that they were firing tons of employees of their gaming division, canceling at least two projects in Perfect Dark and Everwild, and that they were closing the game developer, The Initiative. It’s another in a long line of layoffs for Microsoft totaling more than 9,000 employees because they want to maximize their profits.
Studios like Raven Software, Sledgehammer Games, Turn 10, Zenimax, and more are also seeing layoffs across the board.
The Initiative was working on Perfect Dark for almost 7 years and they’re the only game studio that was closed in this round. Microsoft has previously closed other studios in their last rounds of layoffs.
The game Everwild from Rare, was also canceled after almost 10 years of work. Now, it might sound like we’re being harsh on Microsoft for putting profits ahead of a good product and people, but they’re not the only ones that have done this. Sony has undergone five rounds of layoffs in the last two years and has closed three studios.
Xbox has over 40 projects in active development according to a memo sent to Microsoft Gaming staff from Xbox Game Studios chief Matt Booty. Every game from their latest Xbox Games Showcase presentation in June is continuing on. Here’s the full memo.
The Microsoft Games Memo
Following Phil’s note, I want to share more about the changes to the Studios business units. We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio. As part of this, we are closing one of our studios, The Initiative. These decisions, along with other changes across our teams, reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape. We did not make these choices lightly, as each project and team represent years of effort, imagination, and commitment.
Our overall portfolio strategy is unchanged: build games that excite our players, continue to grow our biggest franchises, and create new stories, worlds, and characters. We have more than 40 projects in active development, continued momentum on titles shipping this fall, and a strong slate headed into 2026.
For those directly affected, we are working closely with HR and studio leadership to provide support, including severance, career transition assistance, and where possible, opportunities to explore roles on other teams.
To everyone across our studios: thank you. Your creativity and resilience continue to define who we are. I believe in the strength of our teams and the direction we’re taking on the path ahead.
A Troubling Development For Video Games Overall
This is a troubling trend for the gaming industry that shows no signs of stopping. Video games are extraordinarily popular, but they’re also incredibly expensive to produce, so the margin for error is incredibly low.
Companies like Microsoft and Sony have expanded exponentially in recent years, swallowing up studios and developers left and right. It’s natural that some of them wouldn’t survive. But it’s still an awful development nonetheless.
We’ll keep you updated on this story as it develops.
For more on Gaming, make sure to check back to That Hashtag Show.
That Hashtag Show
