This week, as widely expected based on earlier reports, Microsoft began another sweeping round of layoffs – its fourth in just 18 months – this time affecting thousands of people across the company. It’s believed more than 9,000 employees have lost their jobs as a result of this most recent move, which Microsoft told Eurogamer were “necessary to position the company and teams for success in a dynamic marketplace.”
Since the announcement, additional reports have surfaced painting a clearer picture of the devastation wrought by Microsoft’s latest cost cutting measures, as well as the substantial impact on its Xbox division. Beyond the significant human cost of the move – which Xbox boss Phil Spencer insisted was necessary to ensure the “enduring success” of the company in a message to staff – further details on the specific studios and projects impacted have now begun to emerge.
Rare’s fantasy adventure Everwild, first announced in 2019, has reportedly been cancelled, for instance, leading to the departure of studio veteran Gregg Mayles after 35 years. Microsoft’s troubled Perfect Dark reboot, unveiled in 2020, has reportedly also ceased production and its first party developer, The Initiative, closed. Microsoft is also said to have terminated its partnership with Crystal Dynamics, which was called in to help on the beleaguered project back in 2022, raising questions around how that team may also have been impacted by yesterday’s news.
Elsewhere, an unannounced ZeniMax MMO has reportedly been cancelled, while 200 people are said to have lost their jobs at the Microsoft-owned Candy Crush maker King, and nearly 50 percent of staff at Forza Motorsport developer Turn 10 have reportedly been laid off. The full extent and impact of Microsoft’s massive “organisational and workforce changes” are yet to become clear, with Microsoft only providing limited information to press. It has, however, moved swiftly to deny rumours of Phil Spencer’s imminent retirement, insisting the Xbox boss won’t be retiring from his position “anytime soon”.
It isn’t just projects within Microsoft that have been affected too. Romero Games, the small Irish developer set-up and run by Brenda Romero and John Romero, has had the funding pulled on its new shooter, effectively ending the project; and a trailer for Contraband, the co-op smuggling game by Swedish outfit Avalanche Games, has disappeared from Xbox’s YouTube channel, raising questions about the health of the project.
With new reports continuing to surface around this week’s bombshell its impact on Xbox, we’ve set up this rolling news blog to sift through the confusion, and to collate breaking news and industry reactions as the story continues to evolve.
Our live coverage of this event has finished.
Rogueywon says: So this is like the evil twin of those live articles we get for Summer Games Fest and the like? Those are for announcing new games, while this is for announcing cancellations and layoffs? Bleak stuff…
Quite, but a useful way to gather everything together. A glum good afternoon to you all.
I actually had a dream with Phil Spencer in last night, I assume because I went to sleep thinking about this situation, and in the dream I had to interview him. We got as far as the interview starting and then I don’t remember any more, so I have no breaking dream-news for you.
But I woke up feeling sad about the whole situation. Sad, obviously, for the people losing their jobs. Sad to see decorated developers like Matt Firor, the head of Elder Scrolls Online (and once the co-creator of Dark Age of Camelot, an MMO that means a lot to me) leaving his role after 18 years, after the cancellation of a new MMO he’d been working on. And sad to read about Gregg Mayles reportedly leaving Rare after 35 years there. It’s such a shame. I had thought Rare resurgent in recent years, after the success of Sea of Thieves, and I’d greatly looked forward to Everwild, and now I’m left bewildered and wondering what will become of the studio that’s there. I only hope the people losing their roles are being offered generous severance packages with it.
There was also a feeling of losing belief in Microsoft and Xbox. When Microsoft started buying up studios a few years ago, I watched it all enthused. I was really excited at the prospect of studios like Obsidian Entertainment and inXile finally having the backing of a company with deep pockets and resources. I was excited to see Blizzard wrestled away from Kotick, and curious about where Microsoft would take Bethesda. I thought it was a good thing. But of late it’s seemed to be more precarious being a part of Xbox than not.
goggamanxp says: – Warcraft rumble confirmed to not be getting any new content due to layoffs.
– John Romero’s studio lost funding for new shooter from Microsoft cuts
We have fuller write-ups of these nearly ready to go, incidentally. I was never quite sure about Warcraft Rumble but it’s sad to hear about Romero Games. It also sounds like it’s put the small Irish studio in a very difficult position too.
Romero Games’ new shooter cancelled by Xbox
Romero Games, the small Irish game development studio set up by John Romero and Brenda Romero, has had its funding pulled by Microsoft, effectively ending development of an all-new shooter IP it was working on.
Brenda Romero announced the development in a statement on social media, saying there was nothing the studio could do to prevent this. All milestones were reached on time and apparently well received.
Jobs have been lost as a result, with some departing staff reporting that the entire development team has been laid off.
Context for Xbox’s most recent wave of layoffs
A brief bit of extra context for yesterday’s layoffs: as noted above, these mark the fourth round of job cuts at Microsoft in just 18 months, making for a total of over 11,500 layoffs in that time. And if you go back a further 12 months, you can unfortunately add an additional 10,000 job cuts to that tally.
In January 2024 (a little over three months after it formally acquired Activision Blizzard for $69bn), Microsoft confirmed it had laid off approximately 1,900 people from its video game teams – a decision Xbox boss Phil Spencer called “painful” at the time. That was followed by another 650 job cuts in September (which Spencer insisted would “organise our business for long term success”), and a “small” number of further layoffs were reported earlier this year. These are said to have impacted employees spanning Microsoft’s security, experiences and devices, sales, and gaming divisions.
Tens of thousands of video game workers have sadly now been laid off in recent years, with everyone from small indies to massive companies including Sony, EA, Epic Games, Riot Games, Warner Bros., and Embracer Group having announced job cuts or closed studios. Last year, The Game Business’ Chris Dring, writing for Eurogamer, took a look at some of the reasons behind the devastating layoffs affecting the industry.
Due to layoffs, Warcraft Rumble won’t receive any more content updates
Blizzard has announced that 2023 mobile game Warcraft Rumble will not be receiving any more content. This is because its developers have been laid off.
This news comes less than a year after the mobile game made its debut on PC. The decision to cease development on new content does not mean the game will go offline completely, however: per Blizzard, Warcraft Rumble will continue to operate with in-game events and bug fixes, we just won’t be getting any new content.
“Warcraft Rumble began development nine years ago as a love letter to Azeroth and launched back in 2023, reflecting input from enthusiastic players around the globe and the effort of a passionate team—some of whom continue to support Rumble or other Blizzard games, and some we’ve had to sadly part ways with,” Blizzard wrote.
The game hit digital storefronts some 18 months after its initial unveiling, and was dubbed a ‘free-to-play tower offence’ title.
Phil Spencer, Microsoft Gaming CEO, not retiring from Xbox “anytime soon”
As we reported this morning, Phil Spencer won’t be stepping down from his role as Microsoft Gaming CEO “anytime soon”, according to a statement shared with The Verge. That’s despite rumours shared on social media, and calls for his departure following these latest layoffs.
Sea of Thieves and Banjo-Kazooie director Gregg Mayles reportedly leaving Rare after 35 years
Rare’s most seasoned creator Gregg Mayles – known for directing the likes of Banjo-Kazooie and Sea of Thieves, as well as his work on Donkey Kong 64 and many more games – is reportedly leaving the studio after more than 35 years.
Rare’s Everwild cancelled following Xbox job cuts
Rare’s fantasy adventure Everwild has been cancelled following layoffs at Xbox.
The working day comes to an end in the UK but as America awakes, we wonder what new developments the evening will bring.
In the meantime, let’s have a look at what you’ve been saying.
Speculation mounts as Avalanche’s Contraband trailer disappears
There’s growing speculation developer Avalanche Studios’ 70s-set co-operative smuggling game Contraband – which was set to be published by Xbox Game Studios – might also have been caught up in yesterday’s cuts and cancellations after fans noticed its trailer has seemingly been yanked from the official Xbox YouTube channel. Contraband was announced in 2021, but little has been seen of the project since then. We’ve asked Xbox and Avalanche for comment and will dive deeper into the story if a clearer picture begins to form.
Xbox exec outlines ways laid-off staff can use AI to help them find new jobs
Xbox Game Studios Publishing executive producer Matt Turnbull has suggested laid-off staff use generative AI to help with the process of finding a new job.
In an ill-judged post on LinkedIn, which has since been removed (caught by game developer and journalist Brandon Sheffield), Turbull wrote: “I know these types of tools engender strong feelings in people, but I’d be remiss in not trying to offer the best advice I can under the circumstances. I’ve been experimenting with ways to use LLM AI tools (like ChatGPT or Copilot) to help reduce the emotional and cognitive load that comes with job loss.”
Turbull went on to share several examples of AI prompts people affected by the lay-offs might use, such as:
- “What kinds of game industry jobs could I pivot to with experience in [X]?
- “Draft a friendly message I can send to old coworkers letting them know I’m exploring new opportunities.”
- “Draft a new LinkedIn ‘About Me’ section that focuses on my leadership style, shipped titles, and vision for game development.”
The irony of people losing their jobs because their games were cancelled, and therefore not shipped, appears to be lost on him, as is the salt-to-wound effect of espousing AI use when AI development is already pulling resources away from games, both in human and monetary form.
Matt Turnbull, Executive Producer at Xbox Game Studios Publishing – after the Microsoft layoffs – suggesting on Linkedin that may maybe people who have been let go should turn to AI for help. He seriously thought posting this would be a good idea.
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— Brandon Sheffield (@brandon.insertcredit.com) July 4, 2025 at 4:48 AM
kinsele2 says: so i typed this into ChatGPT –
if i am a senior executive in a gaming company on a very large salary, and i have just let go many thousands of staff who are now unemployed, is it a good idea for me to go to a social media platform and give my views on AI?
the first couple of lines of it’s response –
In that situation, no, it is probably not a good idea to post casually or optimistically about AI on social media—at least not without very careful consideration of how it will be received.
Here’s why:
🔥 1. Tone-Deaf Optics
my suggestion to Matt Turnbull, he could use AI to check if he is acting like an idiot or not?
And post of the day goes to kinsele! Crikey.
