Xbox is experiencing one of the most turbulent weeks in its history. Countless layoffs, the closure of well-known studios, and the cancellation of highly anticipated games are rocking Microsoft’s gaming division. But which projects are being scrapped, who is staying – and what does this mean for gamers?
In search of lost glory
Not so long ago, Xbox was still synonymous with visionary game studios with big names. Rare, Turn 10, The Initiative – the logos alone were enough to make many fans’ eyes light up. But behind the scenes, the veneer was beginning to crack. Nervousness was already spreading in 2023: despite the success of Game Pass, some first-party titles fell short of expectations.
The climate worsened when several high-profile studios were forced to close in 2024 – a harbinger of what was to come. In June 2025, the next stage of escalation came: a new wave of cutbacks that surprised even insiders. What was quietly emerging was more than just a change of course. It is a radical overhaul of the Xbox DNA.
Xbox layoffs Microsoft restructuring: The big cut has begun
With over 1,900 jobs cut and several AAA projects canceled, Microsoft is openly showing that its Xbox division is being restructured. Among those affected is The Initiative, the studio that wanted to revive a celebrated classic with the Perfect Dark reboot. Now, not only is the game history, but so is the entire development team.
The situation at Rare looks similarly bleak. Everwild, a project that sparked curiosity with its picturesque fantasy world and cryptic trailers, has apparently been shelved for good. The team had already changed its creative direction several times, most recently even under former Banjo-Kazooie veterans. Nevertheless, the signs were never really green.
This is compounded by further cuts at Zenimax Online and Turn 10, where not only employees but also entire concept phases for mobile spin-offs are said to have been scrapped. Microsoft itself speaks of a focus on “sustainable projects with high potential” – meaning primarily Game Pass-optimized content.
For gamers, this means fewer risky experiments and more brand management.
At least Xbox announced that over 40 titles are in active development, including State of Decay 3 and a new game in the Gears series. It remains to be seen whether these plans will be enough to win back fans.
