It’s been a devastating week for the games industry as hundreds of employees have lost their jobs at Xbox as a result of a round of layoffs across parent company, Microsoft – layoffs that have totaled in excess of 9000. It’s been a depressingly regular story in the video games industry over the past few years, and it’s likely things are going to continue in this vein throughout the rest of 2025. It’s bleak out there.
Once seen as a recession-resistant field, developers and publishers have been making layoffs in significant numbers for the past few years; you may remember headlines noting 860 layoffs at Epic, 1800 redundancies at Unity. 900 by PlayStation, 530 at Riot – and even a previous 1900 by Xbox.
This week, Microsoft instigated an additional round of layoffs – that makes four rounds in under two years. Microsoft told Eurogamer these layoffs were “necessary to position the company and teams for success in a dynamic marketplace.”
To help you process these seismic events, we have broken down the updates of the week into headers so you can more easily digest the land as it stands as we head into the holiday weekend of 4th July.
Affected projects and personnel
Rare’s fantasy adventure Everwild, announced over six years ago and mostly kept quiet since, has reportedly been cancelled. Subsequently, Gregg Mayles – who has been at Rare for a massive 35 years – announced his departure from the company.
The reboot of Perfect Dark, developed by The Initiative, has been cancelled as part of the latest round of cuts at Microsoft. The reboot of Rare’s series was first announced back in December 2020, and has been in development at The Initiative ever since. After numerous setbacks, Tomb Raider developer Crystal Dynamics was brought in to assist; but it seems the project will never see the light of day. Joanna Dark actor Alix Wilton Regan implored fans to use their voices to save Perfect Dark, after the game was cancelled by Microsoft earlier this week.
Romero Games, the small Irish game development studio set up by veteran games devs John Romero and Brenda Romero, had its funding pulled by Microsoft, ending development of an all-new shooter IP. Unconfirmed reports suggest the entire development team has been laid off.
Forza Motorsport “is no more”, claims a former Turn 10 employee. Ex-content coordinator, Fred Russell, shared a post on Facebook with images from across his time working on the series, noting: “Turn 10 Studios has shuttered the Forza Motorsport space and the team is no more.” Forza Horizon development, it’s suggested, will continue. Per Bloomberg’s Jason Schrier, almost 50% of Turn 10 staff has reportedly been laid off.
Chris Linn, senior producer at Zenimax Online Studios, has confirmed the cancellation of an unannounced MMO – codenamed Blackbird – on LinkedIn. “Today was one of the biggest disappointments of my 35 year long career in games. My disappointment isn’t primarily for myself, but for my team, and for players that will never get to play the amazing game we were building.” Zenimax Online Studios president Matt Firor also announced his intention to step down as a result of the layoffs and the cancellation of the unannounced game.
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Per Bloomberg, Microsoft’s King mobile gaming division is laying off 200 people – that’s around 10% of the workforce, in its studio based in Barcelona, Spain.
Non-game specific teams have also been affected. Per The Verge, employees in Xbox’s user research team have been laid off, including head of product for family and child safety Mike Mongeau.
Xbox response
Xbox head Phil Spencer addressed this week’s job cuts in a memo to staff (via IGN).
“Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.
“I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.
“Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental — it is the result of years of dedicated effort from our teams.
“HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.
“Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.”
In an email to staff – seen by Eurogamer, Jason Schrier and Windows Central – Xbox’s studio head, Matt Booty, added:
“Following Phil’s note, I want to share more about the changes to the Studios business units,” the email reads.
“We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio. As part of this, we are closing one of our studios, The Initiative. These decisions, along with other changes across our teams, reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape. We did not make these choices lightly, as each project and team represent years of effort, imagination, and commitment.”
In a remarkably tone-deaf follow-up to the layoffs, Xbox Game Studios Publishing executive producer Matt Turnbull suggested laid-off staff use generative AI to help with the process of finding a new job. A since-removed LinkedIn post read:
“I know these types of tools engender strong feelings in people, but I’d be remiss in not trying to offer the best advice I can under the circumstances. I’ve been experimenting with ways to use LLM AI tools (like ChatGPT or Copilot) to help reduce the emotional and cognitive load that comes with job loss.”
Turnbull’s post continued with a series of generative AI prompt ideas for helping employees find new work, and an invitation to “share with others in your network.”
