Microsoft fires 9,000 employees, equivalent to 4% of its workforce, halting development of the Perfect Dark reboot and closing studio

It has been reported that Microsoft will be cutting jobs at its Xbox gaming division, but now it has come to fruition. Microsoft has announced that it will lay off about 4% of its global workforce, and will also close The Initiative, the game studio developing the Perfect Dark reboot.

Microsoft is closing down Xbox studio The Initiative, with Perfect Dark killed as well — joining Everwild and ZeniMax's new IP, and other unannounced projects | Windows Central
https://www.windowscentral.com/gaming/xbox/microsoft-is-closing-down-xbox-studio-the-initiative

Microsoft cancels Perfect Dark reboot, shuts down studio | Polygon
https://www.polygon.com/gaming/606229/perfect-dark-reboot-canceled-xbox-initiative

Microsoft laying off about 9,000 employees in latest round of cuts
https://www.cnbc.com/2025/07/02/microsoft-laying-off-about-9000-employees-in-latest-round-of-cuts.html

Microsoft cancels its Perfect Dark and Everwild Xbox games | The Verge
https://www.theverge.com/news/696877/xbox-perfect-dark-everwild-cancelled-the-initiative-layoffs

Perfect Dark is an FPS developed for the Nintendo 64 and was released in Japan in October 2000. The original version of Perfect Dark is still available on Xbox at the time of writing, as well as on Nintendo Switch Online, a paid subscription service for the Nintendo Switch.

NINTENDO 64 Nintendo Switch Online Additional Titles [June 19, 2024] - YouTube


The development of a reboot of Perfect Dark was announced in 2020. You can check out the gameplay footage of the reboot in the video below.

Perfect Dark - Gameplay Reveal - Xbox Games Showcase 2024 - YouTube


The development of the rebooted version of Perfect Dark was handled by The Initiative, which was founded in 2018. Darrell Gallagher , who founded The Initiative, is a game developer known for his work on Square Enix's ' Rise of the Tomb Raider '. The rebooted version of Perfect Dark was developed in collaboration with Crystal Dynamics, where Gallagher previously worked, but with the closure of The Initiative, the development of the rebooted version of Perfect Dark has been canceled and the partnership with Crystal Dynamics will also end. Microsoft is encouraging employees affected by the closure of The Initiative to move to other Xbox-related positions within the company.

Matt Booty, head of Xbox Games Studio, revealed that not only Rare 's IP 'Everwild' and 'Perfect Dark' have been canceled, but also other unannounced projects. According to a survey by technology media Windows Central, one of the canceled unannounced projects is ZeniMax Online's new MMORPG 'Blackbird,' which was planned as a successor to 'The Elder Scrolls Online.'

Microsoft will hold an Xbox Games Showcase in June 2025, during which it will announce a number of new games. According to a source who provided information to Windows Central, there is no risk of the new titles announced at the Xbox Games Showcase being cancelled.

[4K] Xbox Games Showcase 2025 | The Outer Worlds 2 & Grounded 2 Direct - YouTube


In addition to The Initiative, Activision Blizzard cut staff in its quality assurance , marketing and sales departments. Undead Labs also cut staff despite being in the middle of development of its upcoming zombie apocalypse simulator. Turn 10 Studios , developer of Forza Motorsport , also cut staff on a large scale.

Microsoft's massive layoffs are affecting a variety of divisions, from Azure to Xbox. Although only 4% of the company's employees (about 9,000 people) are affected, the company says that development plans for the next-generation Xbox are unaffected.

'To position our gaming division for enduring success and enable us to focus on strategic growth areas, Xbox is exiting or scaling back certain areas of our business and following Microsoft's lead by eliminating management hierarchies to increase our agility and effectiveness,' Microsoft Games CEO Phil Spencer said in a statement to employees.