Microsoft Begins Massive Layoffs: 9,000 Employees Lose Their Jobs, Gaming Division Also Affected

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The rumors were true. After reports of a new wave of layoffs at Microsoft began circulating in June, today we received confirmation. According to CNBC, Microsoft will lay off as many as 9,000 employees, which represents less than 4% of the company’s global workforce.

The wave of layoffs hasn’t spared Microsoft’s gaming division either, despite Xbox head Phil Spencer claiming that the platform, hardware, and games have never been stronger. In an email shared with staff and published by The Verge, Spencer emphasized that the changes are necessary to refocus the company on areas with the greatest potential. According to him, Microsoft will protect what is already successful while investing in areas with the highest potential in order to ensure growth.

This marks the fourth round of layoffs in Microsoft’s gaming division since January 2024, when nearly 2,000 employees were dismissed. This was followed by the closure of Arkane Austin and Tango Gameworks (although the latter was later revived thanks to Krafton). A few months later, another 650 jobs were cut. These moves come at a time when Microsoft is reporting record numbers of players, games, and hours played on its platform, as well as on Xbox Game Pass.

UPDATE: According to information published by Jez Corden of Windows Central, Microsoft will shut down The Initiative studio due to the cancellation of Perfect Dark. Matt Booty, head of Xbox Game Studios, sent an internal email confirming the cancellation of Rare’s Everwild, Perfect Dark, and several other “unannounced projects.”

Original Report: Which Projects Have Been Cancelled?

According to Bloomberg, an estimated 200 employees, around 10% of the workforce, will be affected at King, the studio known for Candy Crush. The exact number of layoffs in other offices, including those in the US and Europe, is still unknown. Jason Schreier also confirmed the cancellation of Rare’s long-awaited title Everwild. In addition, there are indications that both Perfect Dark and the new MMORPG codenamed Blackbird from ZeniMax Online Studios have also been cancelled, although official confirmation is still pending.

For those unfamiliar, Everwild, announced back in 2019, was meant to be a new IP from the British studio Rare, known for the successful Sea of Thieves and the classic Perfect Dark. Everwild promised a mix of third-person adventure and “god game” elements. However, the project struggled with serious development issues from the start, culminating in a full studio restructuring in 2021 following the departure of creative director Simon Woodroffe.

Similarly, ZeniMax Online Studios, known for The Elder Scrolls Online, has lost its new project, a fantasy MMORPG codenamed Blackbird, which had been in development since 2018. According to sources from Windows Central, Blackbird was intended to be the successor to The Elder Scrolls Online, featuring branching dialogue similar to Mass Effect or Star Wars: The Old Republic.

It is still not entirely clear whether Perfect Dark, developed by The Initiative in collaboration with Crystal Dynamics, will be cancelled. Scrapping the game could have serious consequences for The Initiative, as it was their flagship project. Microsoft has not yet officially confirmed the game’s status, but if the rumors are true, the studio’s future may be in jeopardy.

Despite the cancellations, Microsoft’s hardware division has remained largely unaffected. Plans for the next generation of Xbox consoles, including a full successor to the Xbox Series X with possible Steam support, remain unchanged, alongside the company’s continued partnership with AMD.