Microsoft is closing down the Xbox studio known as The Initiative after 7 years, which will affect a number of games, including the game Perfect Dark, joining the game Everwild and ZeniMax’s new IP, among other unannounced projects.

Microsoft’s layoffs affected 4% of its global workforce and impacted every single division within the company, according to an article by Windows Central. Many of those layoffs were focused on Xbox, with staff members across several different departments receiving notice that they were terminated from their positions today. These layoffs being focused on Xbox, seem to be another saga in the wave of video game layoffs sweeping the video game industry. Despite the rising popularity, purchase numbers, and reach of video games, companies are still struggling to turn a profit. Development timelines and costs have both risen, with games costing millions to develop, meaning developers are banking on games selling in the millions to recoup the costs.

The Xbox layoffs are a microcosm of the video game companies’ current struggle in the market and their ability to retain their staff. The Initiative is sadly one of these companies that will be shutting down after the layoffs. They were set to release the game Perfect Dark, which was released at the Xbox Games Showcase 2024, which was meant to be the return of Rare’s stealth IP from the 2000s. A previous legend from the game Tomb Raider, Darrell Gallagher, was even on the team with members of the team from Crystal Dynamics. While these layoffs were theorized by many, including by members of our team, it’s still sad news.

In a strange twist, however, Microsoft has encouraged affected developers to apply for other roles within Xbox, putting them forward for priority consideration. They will also be providing severance and support to the around 9000 laid-off employees.

Currently, it appears that games from the Xbox Games Showcase 2025 will continue to be produced and released. However, the precedent set is that games showcased may not always be safe from the effects of layoffs.