Just last week of June 2025, we saw one of the biggest Microsoft Layoffs yet again. Affecting over 9000+ staff at Microsoft, the layoffs made a major dent in the Xbox division and many developers. With over 2000+ cuts in jobs and financial halts, major Xbox Game Studios have come under the chopping block. With outright game cancellations, development halts, and more. Let’s take a look at every game and developer affected by Microsoft Layoffs and what this means for the future of Xbox Games.
Every Xbox Game Canceled After Microsoft Layoffs
The Microsoft layoffs have hit the Xbox game division hard, with multiple projects being axed and shelved by various developers. These layoffs were not a surprise, but what followed has been the talk across social media and gaming forums. Major shockers begin with the Perfect Dark Studio shutdown and the Rare Studios’ Everwild cancellation. Both have been years in development. Below is the list of every Xbox game cancellation after the Microsoft Layoffs 2025.
Perfect Dark
Developer: The Initiative Studio
Perfect Dark was going to be Xbox’s next big thing with one of the most ambitious narrative reboots for a game’s franchise. The game was to be an action-adventure spy thriller title set in the future, with a release scheduled for 2026. After the layoffs, the entire Initiative Studio staff has been laid off or reassigned. Initiative Studio itself was struggling before the cuts, as there were slim chances of Perfect Dark releasing on time. The Microsoft layoffs have hit Initiative the hardest as the entire studio is under internal turmoil and chaos.
Perfect Dark was slated to be released in 2026 and would have been a Day One title for Game Pass. And would be available for the Xbox Series X and PC.
Everwild
Developer: Rare Studio
Rare, the Studio Behind Sea of Thieves, has been working on a new fantasy title called Everwild. Nearly a decade in development, Everwild was highly anticipated by Xbox fans across the world. Now it has been quietly scrapped by Microsoft with several undisclosed layoffs at the Studio.
After the news of Everwild’s cancellation, many industry veterans part of the project have now left the company. Including Legendary Game Designer Gregg Mayles, who has been with Rare Studios for over 35+ years, and EP Louise O’Connor.
Forza Motorsport
Developer: Turn 10 Studios
What came as a shocker to many was the mass layoffs at Turn 10, the studio behind the Forza Series, specifically the Forza Motorsport Games. Over 50% of Turn 10 Studios has been laid off in light of the Xbox Game Division layoffs. With the majority of the staff now gone, there is little hope for a new Forza Motorsport game. Turn 10 will now mainly act as a support team for the more successful Forza Horizon Series and its developer, Playground Games.
While racing continues, it will be more towards the expansion of the Horizon Games rather than the competitive racing sim of Forza Motorsport.
Project Blackbird
Developer: ZeniMax Online
Known for their work on the highly beloved Elder Scrolls Online, ZeniMax was working on an upcoming MMORPG title, known as Project Blackbird. While the project was under secrecy with little information available, only an interview mention in 2022. Project Blackbird was going to be an alien-noir third-person shooter, playing as Revnants across a huge open-world alien planet. ZeniMax had planned a large MMORPG-style game with two playable zones on the planet, one with an endless sun while the other shrouded in an icy darkness.
After the Microsoft Xbox layoffs, the project was halted with no confirmation of its renewal or cancellation. From sources, the last known team size for ZeniMax’s Project Blackbird was 200 devs working on the game.
Every Xbox Studio Affected by Microsoft Layoffs in 2025
Even Xbox’s in-house Halo Studio wasn’t safe from the culling by Microsoft. There is no confirmed number of layoffs at 343 Industries, now Halo, but sources have revealed that some roles have been shut down. While there is no game cancellation, these layoffs will surely impact upcoming games and projects from the studio. Even Call of Duty developers Raven, Highmoon, and Sledgehammer Games were affected, with support teams being cut down
The Mobile division of Xbox Game Studios was also slashed down to size, with Blizzard and King seeing layoffs across both teams.
Warcraft Rumble: A mobile title, Warcraft Rumble is a tower defense strategy game set in the world of Warcraft. Developed by Blizzard Entertainment, the studio saw around 100 layoffs affecting the game’s future development. The devs will now focus on in-game events, bug fixes, and support for the game.
King: The developers of the popular phenomenon Candy Crush also saw staff layoffs across their entire studio. Affecting around 200 employees, which is 10% of the company’s strength.
What do these layoffs mean for the future of Xbox and the Gaming Industry?
These Mass Layoffs from Microsoft have surely been a setback for Xbox and its game developers. These changes show a clear picture that Xbox is heading in a new, more cautious direction. Focusing on fewer but well-known IPs like Halo, Call of Duty, Forza Horizon, and Minecraft, which are already established as Industry names. Ambitious new projects like Everwild and Perfect Dark are now seen as risks rather than long-term rewards.
The biggest reason behind all this is financial pressure. Reports have come in stating that Microsoft CFO Amy Hood had set extremely high expectations in terms of profit from Xbox. Basically anything that didn’t cash out a quick buck in the short term gets cuts, meaning well-known IPs over Creative “Risks”. On top of everything, Xbox also lost some of its key talents like Gregg Mayles, Louise O’Connor, and Matt Firor. Weakening it’s already dwindling top developer talent.
This has been part of the grand Microsoft & Xbox Strategy. The company is already putting out more games on PlayStation and Switch, turning Xbox into more of a multiplatform content company than a console-driven brand. This itself could impact the Xbox Game Pass too, with fewer new first-party games and an overly reliance on third-party deals, making the Game Pass service less attractive.
In short, Xbox is betting on safer projects and broader platforms over big, bold ideas. Only 2026 will answer what this means for Xbox gamers and the entire industry.
Summary
These Microsoft layoffs have been hard on the many developers working across multiple studios. Phil Spencer also stepped in to raise morale and provide some kind of reassurance to the employees affected at Xbox. Even games still in development, such as Fable, and State of Decay 3, might face delays or get scaled down. Overall, this signals the end of Xbox’s aggressive studio-buying spree and could make developers wary of working under Microsoft.
“Our hearts go out to everyone who has lost their jobs–hang in there, and trust that brighter days lie ahead.”
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