After Microsoft announced on July 2 that it would part ways with approximately 9,000 employees, the Xbox division took the heaviest hit in the gaming industry. The company decided to close some studios and pulled the plug on a number of games, including projects that had been in development for years.

Microsoft is making mass layoffs at Xbox

The first major change occurred with the closure of The Initiative studio. The studio was working on the Perfect Dark game, which was announced in 2019. With the halting of the project, the studio was completely closed. Everwild, developed by Rare, was another major production that was canceled. The game had created great expectations since the day it was announced and had been in development for a long time.

Turn 10 Studios was also affected by this restructuring. More than 70 people were laid off from the team behind the Forza Motorsport series. The remaining team will operate in a limited capacity, only continuing the technical operation of the current game. No information was shared about the development of a new Forza project.

There was also a significant pause on the Blizzard front. Approximately 100 developers within the company were affected by this process. New content production for the mobile tower defense game Warcraft Rumble has been halted. Blizzard announced that the game will not be abandoned completely, but that new updates will not be coming.

Microsoft Gaming CEO Phil Spencer linked the decisions made to the company’s long-term strategies in a message he sent to employees. Spencer emphasized that the company is shifting to a leaner and more effective structure by focusing on high-potential projects with the phrase “the discipline of prioritizing the strongest opportunities.” The statement stated that developing areas will be protected and investments will be made in next-generation gaming experiences.

The decisions made constitute a serious part of Microsoft’s restructuring process in the gaming sector. This contraction experienced on the Xbox side reshapes not only the internal dynamics, but also the company’s strategic priorities within the sector.