Xbox layoffs: The Initiative shut down, Perfect Dark cancelled, Turn10 reportedly cut 50% staff

Layoffs at Microsoft's Xbox games division have affected multiple projects and led to studio shutdowns, including its California-based group The Initiative.

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Xbox management has confirmed that it will close video game studio The Initiative, and shut down production on the Perfect Dark reboot project. Xbox had shown a gameplay reveal of Perfect Dark last year at its annual games showcase. Everwild, the new IP from Rare, was also confirmed as cancelled. The announcement was made in an internal memo from Xbox Game Studios head Matt Booty.

"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."

Other reports indicated that ZeniMax Online's unannounced MMORPG project, codenamed Blackbird, was also cancelled. This game had been set in a new IP and started development in 2018.

The Xbox Game Studios boss goes on to say that there's over three dozen games in various stages of production right now across the organization:

"We have more than 40 projects in active development, continued momentum on titles shipping this fall, and a strong slate headed into 2026."

Other subsidiaries, including Activision's Call of Duty developer Raven Software, are being impacted as well.

The layoffs are also affecting overseas divisions of Xbox. Reports from Bloomberg's Jason Schreier say that nearly 50% of Forza developer Turn10's workforce has been laid off, and that Bethesda's European divisions are also facing layoffs.

Microsoft has provided us with the following statement:

"We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace."