Redmond, Washington — The gaming industry is grappling with significant upheaval as Microsoft recently announced widespread layoffs impacting its Xbox division, among others. This move is part of a broader strategy that has seen more than 9,000 employees let go across the company in recent months, reflecting a tough climate for gaming developers that once seemed insulated from economic downturns.
In a sector that had previously enjoyed steady growth, this wave of layoffs has become increasingly common. Notable companies in the gaming space, including Epic Games and Unity, have previously reported substantial staff reductions. This latest round marks the fourth wave of layoffs at Microsoft in less than two years, with the company stating these decisions are essential for maintaining competitiveness in a rapidly changing market.
Among the projects affected by the layoffs is Rare’s long-awaited adventure game, “Everwild,” which has reportedly been canceled after more than six years in development. Veteran designer Gregg Mayles, who has spent 35 years at Rare, announced his departure alongside the project’s demise. Similarly, a reboot of the classic title “Perfect Dark” has also been scrapped, leading to the dissolution of The Initiative studio, which had taken over development after several challenges.
The turmoil extends beyond individual projects. Microsoft’s funding for Romero Games, an independent studio known for its innovative titles, has been withdrawn, halting development of a new shooter. Reports indicate significant layoffs at Turn 10 Studios, known for the “Forza Motorsport” series, where nearly half of the workforce may be affected.
Zenimax Online Studios also confirmed the cancellation of an unannounced MMORPG codenamed Blackbird. Chris Linn, a senior producer at the studio, expressed his disappointment over the project’s termination, emphasizing the impact on his team and the fans who were eagerly awaiting the game. This cancellation has contributed to the resignation of Zenimax Online’s president, further emphasizing the instability within the organization.
The King division, responsible for mobile gaming within Microsoft, has seen approximately 200 positions eliminated, which represents around 10 percent of its workforce. Among other layoffs, employees from Xbox’s user research team were also let go, including the head of product for family and child safety.
In a memo addressing the staff cuts, Xbox head Phil Spencer sought to assure employees of the company’s positive trajectory, highlighting the growth in game engagement and hardware performance. He mentioned the necessity of making tough choices to sustain success and ensure that the organization could focus on strategic growth.
Staff at Xbox were informed that those impacted would receive severance benefits in line with local regulations. Spencer acknowledged the difficult nature of these decisions, noting that the success the company enjoys today is rooted in the hard work of those who are affected.
In a controversial response to the layoffs, an executive suggested that those who lost their jobs could leverage generative AI tools to assist in their job search. This suggestion has been met with backlash for its apparent insensitivity to the gravity of the situation facing displaced employees.
The ongoing challenges in the gaming industry point to a shifting landscape, forcing companies like Microsoft to recalibrate their strategies and resources. As they navigate these difficult waters, the future of many beloved projects hangs in the balance, leaving employees and fans alike in a state of uncertainty.