Microsoft Axes 9,000 Jobs, Shuts Down Studios: Perfect Dark & Everwild Canceled Amid Gaming Layoffs
Ddos 
Shortly after announcing a 3% reduction in its global workforce, Microsoft has once again revealed an expanded round of layoffs, this time affecting approximately 9,000 positions worldwide, with divisions including its gaming operations bearing the brunt. According to a report by Bloomberg, King—the Swedish studio renowned for the mobile game Candy Crush and acquired as part of the Activision Blizzard deal—has dismissed around 10% of its employees, impacting roughly 200 individuals. Similar notifications have begun reaching staff at Microsoft’s U.S.-based gaming divisions.
This wave of layoffs coincides with the cancellation of several development projects and an internal reorganization. Among the casualties is Everwild, a new IP originally in development at Rare, which has now been officially shelved. Furthermore, The Initiative, the studio helming the reboot of Perfect Dark, will be fully disbanded. These decisions were communicated to affected teams by Matt Booty, head of Xbox Game Studios, who emphasized, “These decisions were not made lightly. Each project and team represented years of effort, creativity, and passion.”
Phil Spencer, Microsoft’s Head of Gaming, stated in an internal memo: “While we’ve achieved record highs in player engagement, game volume, and total playtime, we must make difficult choices to ensure long-term growth. Our focus will now shift toward the most promising initiatives, streamlining management layers and enhancing decision-making agility and team responsiveness.”
The layoffs span across Microsoft’s gaming portfolio, affecting iconic studios such as Halo Studios, the creators of the Halo franchise; Turn 10 Studios, known for Forza Motorsport; as well as Rare, ZeniMax Online Studios, King, Raven Software, and Sledgehammer Games. Several high-profile departures have also been reported, including ZeniMax President Matt Firor and Rare’s veteran designer Gregg Mayles.
Additionally, Warcraft Rumble—a mobile game developed by Blizzard Entertainment and launched on iOS and Android in November 2023, followed by a Windows release in December 2024—will see no further updates, with its development now officially discontinued.
This marks the fourth round of layoffs targeting Xbox operations within the past 18 months. Since Microsoft’s $69 billion acquisition of Activision Blizzard in 2023, the company has undergone multiple restructuring phases across its gaming divisions. Early 2024 saw nearly 2,000 layoffs from Xbox and Activision Blizzard, along with the shuttering of three studios under the ZeniMax umbrella. The current cuts represent a deeper strategic overhaul of Microsoft’s gaming infrastructure.
Despite a wave of layoffs sweeping across the global gaming industry since 2024—reducing development talent by an estimated 11%—Microsoft’s financial performance remains robust, reporting over $25 billion in net income in its most recent quarterly earnings. The company simply commented, “We are continuing to implement necessary organizational and workforce adjustments in response to an evolving market landscape.”
With Microsoft aggressively investing in generative AI and showcasing its Copilot and GitHub Copilot integrations across developer conferences, signs of automation replacing traditional roles have begun to surface within the gaming division.
CEO Satya Nadella has publicly stated that AI is now integrated across most programming workflows, and internal mandates have enforced the adoption of AI-assisted development: “AI is no longer optional—it is the default.” Some employees have reportedly expressed concern, noting, “They are doing everything they can to replace as many positions with AI as possible.”
Furthermore, Microsoft has deepened its partnership with ASUS on handheld gaming devices, while simultaneously outsourcing more game development processes. Even Halo—a flagship franchise often associated with Microsoft’s in-house legacy—has become increasingly reliant on external studios. This shift suggests that, amid Microsoft’s sweeping AI ambitions, the gaming division may be relegated to a lower strategic priority, potentially sacrificed in pursuit of broader corporate transformation.
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