Microsoft Axes Perfect Dark & Everwild

Microsoft's recent layoffs have led to the cancellation of several anticipated games, including Perfect Dark and Everwild. Continue reading to discover which projects were affected and the rationale behind Xbox's significant workforce reductions.

Games Cancelled and Studio Closed in Microsoft's Latest Layoffs

Rare Director Departs Following Everwild's Cancellation

On July 2nd, Microsoft revealed plans to reduce its workforce by approximately 9,000 employees. This restructuring includes the cancellation of multiple game projects, one of which is Rare's new intellectual property, Everwild. An internal email from Xbox Game Studios Head Matt Booty informed staff of these difficult decisions.

"These actions, combined with other organizational shifts, are part of a broader initiative to realign our priorities and concentrate our resources," Booty explained in the message. "This will position our teams for greater success in an evolving industry."

The cancellation of Everwild coincides with the departure of Gregg Mayles, a veteran game designer at Rare with 35 years at the studio. Mayles contributed to numerous beloved titles such as Banjo-Kazooie, Sea of Thieves, and Donkey Kong Country. Executive Producer Louise O'Connor is also leaving the company.

Mayles had been leading development on Everwild since a team restructuring in 2021. The project, in development for nearly a decade, was first announced in November 2019. Updates were infrequent following a trailer in July 2020, though Xbox CEO Phil Spencer noted "steady progress" as recently as February 2025.

Despite the significant investment of time and effort, Everwild was ultimately included in the list of cancelled projects. "We did not make these decisions lightly," Booty stated, acknowledging the "years of effort, imagination, and commitment" from each team.

Perfect Dark Axed as Development Studio The Initiative Closes

Another casualty of the layoffs is the eagerly awaited eco-sci-fi shooter, Perfect Dark. This reboot of the classic stealth franchise was being developed by The Initiative, a studio formed in 2018 to lead the project.

Perfect Dark was announced in 2020, with a gameplay reveal at the 2024 Xbox Games Showcase generating considerable fan excitement. However, the studio had remained quiet about the project's status in the months that followed.

Widespread Job Losses Across Microsoft Gaming

The impact of Xbox's cuts extends beyond these high-profile cancellations. According to a July 2nd report by Bloomberg's Jason Schreier, many other studios and developers within Microsoft Gaming were affected.

ZeniMax Online Studios, known for The Elder Scrolls Online, discontinued a planned new online game and will reduce its staff by 10%. Reports also suggest that teams at Call of Duty studios Raven Software and Sledgehammer Games, as well as Halo developer 343 Industries and Forza Motorsport's Turn 10 Studios, will face reductions.

In his email to staff, Phil Spencer framed the layoffs as necessary for long-term health. "To ensure Gaming's enduring success and focus on strategic growth areas, we are scaling back or ending work in certain parts of the business," he wrote, aligning with Microsoft's wider efforts to streamline management.

Spencer asserted that Xbox's "platform, hardware, and game pipeline have never been stronger," but emphasized the need for disciplined prioritization. "We must make prudent choices now to secure our success in the coming years, focusing on our strongest opportunities."

This marks the fourth round of layoffs at Xbox in the last 18 months. The gaming division faces increased pressure to deliver profitability, particularly following the historic $69 billion acquisition of Activision Blizzard in October 2023.