According to sources who spoke with IGN, the troubled Perfect Dark reboot has been canceled and Xbox studio The Initiative has been shut down. This is part of widespread, devastating layoffs announced at Microsoft today.
The cancellation of Perfect Dark is part of what is rapidly becoming a bloodbath at Microsoft, with reports indicating over 9,000 employees are set to lose their jobs. Sources also informed IGN that Rare’s Everwild has been canceled as layoffs hit the historic UK studio. Candy Crush maker King is heavily impacted, as is Bethesda’s London office.
Perfect Dark was notably absent from Microsoft's June 2025 showcase, despite having been featured a year earlier with a high-profile new trailer. That trailer offered the first look at gameplay for the first-person shooter and marked the welcome return of protagonist Joanna Dark.
Xbox established The Initiative in 2018 to lead the development of the Perfect Dark reboot, later enlisting Tomb Raider developer Crystal Dynamics for support. Perfect Dark first launched on the Nintendo 64 in 2000, developed by Rare, which has survived these latest cuts.
In a memo to staff sent today and reviewed by IGN, Xbox head Phil Spencer did not confirm specific details, stating “any organizational shifts will be shared by your team leaders in the coming days.”
The following message from Phil Spencer was shared with all gaming staff today:
Today, we are communicating decisions that will affect colleagues throughout our organization. To position our Gaming division for long-term success and allow us to focus on key strategic growth areas, we will discontinue or scale back work in certain parts of the business. We are also aligning with Microsoft's initiative to reduce management layers, enhancing our agility and effectiveness. Out of respect for those impacted today, the details of today's notifications and any organizational changes will be communicated by your team leaders in the coming days.
I am aware that these changes come at a time when we have more players, more games, and more hours played than ever. Our platform, hardware, and game pipeline have never been stronger. Our current success is built on difficult decisions we made in the past. We must make strategic choices now to ensure our success in the years ahead, and a crucial part of that strategy is the discipline to focus on our strongest opportunities. We will protect our thriving areas and concentrate our efforts on domains with the greatest potential, all while meeting the company's expectations for our business. This focused approach ensures we can deliver outstanding games and experiences for players for generations.
Prioritizing our opportunities is critical, but that does not diminish the gravity of this moment. Simply put, we would not be in our current position without the time, energy, and creativity of those whose roles are affected. These decisions are in no way a reflection of the talent, creativity, and commitment of the individuals involved. Our momentum is not accidental—it is the result of years of dedicated work from our teams.
HR is working directly with affected employees to provide severance benefits (in accordance with local laws), including compensation, healthcare coverage, and job placement resources to assist with their transition. Employees whose roles have been eliminated are encouraged to apply for open positions across Microsoft Gaming, where their applications will receive priority consideration.
Thank you to everyone who has helped shape our culture, our products, and our community. We move forward with profound gratitude and respect for all who have contributed to this journey.
Phil
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Microsoft has made significant reductions to its gaming workforce since the $69 billion acquisition of Activision Blizzard. The company laid off 1,900 employees in January 2024, followed by further cuts a few months later with the closure of Redfall developer Arkane Austin and Hi-Fi Rush developer Tango Gameworks. In September 2024, Microsoft cut an additional 650 positions from its gaming division. Then, in May of this year, Microsoft cut a staggering 6,000 jobs, representing 3% of its total workforce. Today's layoffs mark the fourth round of cuts to hit Microsoft's gaming business in the last 18 months.
In a June 2024 interview with IGN, Xbox head Phil Spencer stated: "I have a responsibility to run a sustainable and growing business within the company, and that means sometimes I have to make difficult decisions that I frankly do not enjoy, but decisions that someone must make."
These cuts follow closely after Microsoft's confirmation of its plans to release next-generation Xbox consoles and its strong presence at the gamescom trade fair.
