closing studios, layoffs, cancellation of games, we take stock

It is a day of anxiety and sadness that employees of the Microsoft group have experienced, and more particularly in its video game activity, in the Xbox studios, Activision Blizzard and Zenimax Bethesda.

Despite its record profits, $ 200 billion in 2 years, Microsoft has announced a new wave of group dismissal to return nearly 9,000 people.

We discovered the extent of the damage throughout the day of July 2 in the United States, in the evening of July 2 to 3 in France. A day when employees could gradually discover their fate, sometimes by disconnecting their Slack account even before a message from human resources.

This Thursday, July 3, we can make a first assessment of the dark day crossed by Microsoft.

The assessment

Microsoft has put more than 9000 people at the door, especially at Xbox. Here is the list of touched teams, reported in the press.

• Turn10 (Forza Motorsport) would have lost 50% of its workforce
• King (Candy Crush) would lose 10% of its workforce or about 200 people
• Zenimax Online Studios (The Elder Scrolls Online, Project Blackbird)
• Raven Software (Call of Duty)
• The Initiative (Perfect Dark): Complete studio closure
• Rare (Sea of ​​Thieves, Everwild): layoffs and departures of historic members of the studio
• Halo Studios
• Xbox Game Studios Publishing
• Blizzard (Overwatch, Warcraft, Diablo): the Warcraft Rumble team would have been severely affected

Other studios in Microsoft Gaming would have also been impacted without being able to measure the damage at this stage. Undead labs are mentioned (State of Decay) and three Activision subsidiaries: Sledgehammer, Beenox and High Moon.

The other affected teams

Beyond the development teams within the studios, it is also teams in the heart of Xbox who were affected by this wave of dismissal.

Mike Mongeau, head of the Xbox Family and Child Safety team, who oversees parental control, but also all the functions allowing families to take advantage of the Xbox ecosystem, was dismissed and tells it about Linkedin. His team would have been heavily touched.

Likewise The Verge reports that the Xbox User Research team working on the user experience has been affected. It is a crucial team in the ecosystem to improve the quality of interfaces and the ergonomics of Xbox software and games, but also developing tools.

The studios spared

Some studios currently seem to have been spared by this wave of layoffs.

Gauthier Andres, journalist for Origami, indicates that this is the case of Arkane Lyon (Blade) et MachinesGames (Indiana Jones, Wolfenstein).

Double Fine Production (Psychonauts 2, Keeper) would also have been preserved.

The initiative closes before launching its first game

In 2018, Microsoft decides to invest massively in its ability to produce video games by buying several studios like Ninja Theory, Playground Games, Compulsion Games or Undead Labs.

The firm also decides to create a brand new video game studio: The Initiative. Based in Santa Monica in California, he had to become the award -winning “AAAA” studio against Santa Monica Studio and Naughty Dog at PlayStation. Microsoft had recruited several veterans of the industry, including Darrell Gallagher (ex-Crystal Dynamics, Tomb Raider), Christian Cantamessa (screenwriter of Red Dead Redemption) and Brian Westerga (producer on the reboot of God of War).

Several press surveys have revealed that the development of the studio’s first game was particularly bad with an important turnover of the teams. Microsoft had debauched the help of two external studios: Crystal Dynamics and certain Affinity, to make it possible to advance development.

The latest echoes underlined that the development of the game was advancing at very good pace.

Seven years later, The Initiative closes its doors without having been able to launch this project: a Reboot of Perfect Dark unveiled through several trailers over the years.

The games canceled

Several games have been canceled by Microsoft because of these layoffs:

• Perfect Dark
• Everwild
• The new MMORPG of Zenimax Online

Several other not announced projects would have been canceled by Microsoft without knowing the details. According to Matt Booty, manager of Xbox Game Studios, 40 games are still being produced at Microsoft.

Everwild was supposed to be the next rare game after the success of Sea of ​​Thieves. Presented in November 2019, the game quickly disappeared from Microsoft’s announcements.

Press surveys revealed that the development of the game had experienced a reboot, and that the teams could not materialize their vision in a video game.

In October 2024, however, Phil Spencer, the boss of Microsoft Gaming, visited the rare teams to discover the state of the game and commented: “ Great day at rare, hanging out with developers at their offices and playing Everwild ».

In February 2025, only a few months ago, Phil Spencer indicated in a podcast that Everwild was his most anticipated Xbox game and that he was satisfied with the progress made by the development team.

Gregg Mayles, game designer for 35 years at Rare leaves the studio following the cancellation of the game, as VGC reveals. Louise O’Connor, another history of the studio, would also be on the start.

The consequences on external studios

With the takeover of Activision Blizzard and Zenimax, Microsoft has become the most important studio and video game editor in North America.

Beyond its own employees, the firm calls on many subcontractors and external persons. One can easily imagine that they will also make the costs in a second step of these budget cuts.

In particular, we can worry about the fate of Crystal Dynamics, a subsidiary of the Group Group, which has also carried out many studios and waves of layoffs. The studio is at work on a brand new Tomb Raider game for Amazon Games, but seemed to pay the bills thanks to its development contract on Perfect Dark. It ends with the closure of the initiative studio and the cancellation of the game.

Phil Spencer’s reactions and Matt Booty

Here is the message sent by Phil Spencer to all Microsoft Gaming teams, published in the columns of The Verge. It was translated with Deeppl.

Today, we share decisions that will have an impact on colleagues from our entire organization. In order to position Microsoft Gaming on the way to lasting success and to allow ourselves to focus on strategic growth areas, we will end or reduce work in certain areas of the company and follow the example of Microsoft by removing layers of management in order to increase agility and efficiency. Out of respect for people affected today, the details of today’s notifications and organizational changes will be communicated by your team leaders in the coming days.

I recognize that these changes come at a time when we have more players, games and hours of play than ever before. Our platform, our equipment and our roadmap never seemed so solid. The success we are currently experiencing is based on difficult decisions that we have taken previously. We must make choices now to continue to succeed in the years to come and a key element of this strategy is the discipline which consists in giving priority to the strongest opportunities. We will protect what is flourishing and will focus our efforts on the areas that present the greatest potential, while meeting the expectations of society with regard to our activity. This targeted approach means that we can offer exceptional games and experiences to players for future generations.

It is essential to prioritize our opportunities, but that does not detract from the importance of this moment. To say things simply, we would not be where we are today without the time, the energy and the creativity of those whose roles are concerned. These decisions are not a reflection of the talent, creativity and commitment of these people.

Here is the note sent by Matt Booty, in charge of Xbox studios, to the group employees, reported by Windows Central. It was translated with Deeppl.

We have made the decision to stop the development of Perfect Dark and Everwild, as well as to put an end to several projects not announced in our portfolio. At the same time, we are closing one of our studios, The Initiative. These decisions, as well as other changes within our teams, reflect a broader effort to adjust priorities and concentrate resources in order to prepare our teams for greater success in an industrial changing landscape. We have not made these choices lightly, because each project and each team represent years of effort, imagination and commitment.

The overall strategy of our portfolio remains unchanged: creating games that fascinate our players, continuing to develop our biggest franchises and create new stories, new worlds and new characters. We have more than 40 projects in active development, a continuous dynamic on the titles delivered this fall, and a solid list for 2026.

For people directly affected, we are working closely with HR and studios of studios in order to provide them with support, in particular in the form of layoff allowances, career transition assistance and, as far as possible, opportunities to explore roles within other teams.

To all the employees of our studios, we say thank you. Your creativity and your resilience continue to define what we are. I believe in the strength of our teams and in the direction that we take for the future.