Microsoft cancels two major Xbox games, closes studio behind one
What's the story
Microsoft has canceled the development of two major Xbox games, Perfect Dark and Everwild. The move comes as part of a larger restructuring effort within the company, which also includes plans to lay off around 4% of its global workforce. Matt Booty, head of Xbox Game Studios, confirmed the decision in an internal memo, according to The Verge.
Studio closure
The initiative shut down
The cancellation of Perfect Dark and Everwild has also led to the decision to shut down The Initiative, the studio behind Perfect Dark. The company was founded by Xbox in 2018 with a view to rebooting the Perfect Dark franchise. It was working on the game in partnership with Crystal Dynamics, known for its work on Tomb Raider games.
Game evolution
Perfect Dark reboot's gameplay reveal was in 2024
Perfect Dark, a first-person shooter game originally developed by Rare for Nintendo 64 in 2000, saw its reboot's first gameplay reveal in 2024. However, it was absent from Microsoft's June 2025 showcase, where it was expected to make a big appearance. The game's development has been long and complicated, with multiple delays and changes in direction over the years.
Game challenges
Rare still active within Microsoft's gaming division
Everwild, a game from Rare announced in 2019, has also faced development issues. The project was rebooted in 2021 but is now being canceled as well. Despite these changes, Rare remains active within Microsoft's gaming division. The cancellations come as part of a larger trend of layoffs and restructuring at Microsoft since its $69 billion acquisition of Activision Blizzard.
Workforce impact
4th major layoff affecting Microsoft's gaming business
Since acquiring Activision Blizzard, Microsoft has laid off thousands of employees. The company laid off 1,900 workers in January 2024, closed studios like Arkane Austin and Tango Gameworks soon after, and cut another 650 jobs in September. In May 2025, Microsoft slashed another 6,000 jobs or about 3% of its total workforce at the time. This latest round is the fourth major layoff affecting Microsoft's gaming business in the last 18 months.