Microsoft cancels games and closes studios after mass layoffs

Microsoft has decided to carry out 9,000 layoffs—its largest cutback since 2023—particularly affecting its video game division. This restructuring not only involves staff reductions but also the cancellation of flagship projects like Perfect Dark and Everwild, as well as the closure of studios like The Initiative, and adjustments to Halo Studios, Rare, ZeniMax, King Barcelona, ​​and others.

Under this strategy, Xbox has taken drastic decisions:

Perfect Dark, the long-awaited reboot of the franchise, was canceled and the studio in charge, The Initiative, was shut down.

Rare has halted Everwild, a project in development since 2019.

Several unannounced games have been discontinued, including an MMORPG from ZeniMax Online.

Halo Studios and Turn 10 have suffered staff cuts, with at least five employees laid off at Halo and a larger cut at Turn 10.

Inside sources reveal that morale within the studios is at rock bottom. Employees report feeling betrayed: a corporate email describing a “more profitable year than ever” contrasts with layoff announcements. Turn 10 lost nearly half of its workforce, complicating its role in the Forza series.

According to spokespersons, the reason behind these cuts is the need for a more agile and efficient structure, focusing on key areas like Game Pass and artificial intelligence. Phil Spencer emphasized that while Xbox is profitable, these adjustments are "key to long-term success."

1. Talent cuts: More than 9,000 employees are out of work, including developers in Europe and the US.

2. Suspended projects: Games in development for years have been canceled, affecting the release pipeline.

3. Deteriorated work culture: There is a perceived lack of trust in leadership, especially after unexpected closures.

4. Transition to AI: Microsoft is increasing its use of artificial intelligence to generate code, which has increased pressure on developers.

Microsoft's strategy reflects a growing industry trend: prioritizing digital services and subscriptions over traditional development. Xbox, once synonymous with consoles and high-production exclusives, now operates under a more streamlined model, centered on Game Pass as its primary driver.

Meanwhile, critics and experts question whether this approach will sacrifice innovation and creativity in favor of financial efficiency.

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Microsoft faces a crossroads: its massive moves aim to consolidate profitability in a changing environment, but they also risk the stability of its studios and the trust of its talent. The cancellations of Perfect Dark and Everwild, along with the cuts at Halo Studios, underscore a profound transformation in the video game industry. The challenge now will be: can Xbox maintain its innovative core while investing in efficiency and digital services?