Microsoft has officially shut down The Initiative, the Xbox studio founded in 2018 to spearhead major projects like Perfect Dark. After earlier reports suggested the game was at risk, the news is now confirmed: Perfect Dark has been cancelled, and the studio is closing. The project aimed to reboot Rare’s classic stealth franchise with support from Crystal Dynamics, but the collaboration ends without the game ever seeing release.
The studio closure is part of Microsoft’s broader restructuring, which includes mass layoffs affecting about 4% of the company’s global workforce. The cuts have hit multiple divisions, including Xbox, with job losses reported at across studios such as ZeniMax Online, Turn 10, and Rare. Several projects have also been scrapped, including Rare’s Everwild and ZeniMax Online’s now-cancelled MMORPG Blackbird, as Microsoft shifts focus and reallocates resources.
Xbox Game Studios head Matt Booty acknowledged these tough decisions, saying they were made to help teams succeed in a rapidly changing industry. While The Initiative is the only studio to be closed so far, Booty confirmed that other unannounced projects have also been cancelled. Microsoft emphasized its continued commitment to developing new games, noting over 40 active projects and a strong lineup heading into 2026.
Microsoft also reassured fans that titles shown during the recent Xbox Showcase—such as Clockwork Revolution—are still in active development and that next-gen Xbox hardware plans are not affected. However, the layoffs mark another blow to morale at Xbox its claimed, as Microsoft, despite record profits, has cut over 15,000 jobs in 2025 alone amid growing automation and shifting industry priorities.
We will keep you updated as this story continues to develop…
Source: Windows Central
Source: Bloomberg
Image Source: Xbox.com
Corey Dirrig is the Founder and President of Boss Rush Media. He is the host of The Boss Rush Podcast, Nintendo Pow Block, Tower Casuals: The Destiny Podcast, and cohosts a variety of other podcasts and content. You can follow Corey on Bluesky, on X/Twitter, and on Instagram or connect with him on LinkedIn for Business Inquiries.
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Xbox Casuals: An Xbox Podcast is a biweekly podcast dedicated to everything Xbox, brought to you by Tower Casuals and Boss Rush Media. Every other Friday, hosts Corey Dirrig and Josh Finney break down the latest Xbox news, rumors, Game Pass updates, new releases, and more. Catch new episodes every other Friday on all major podcast platforms and on YouTube via the Tower Casuals channel.
Xbox Casuals – An Xbox Podcast by Boss Rush
Xbox Casuals: An Xbox Podcast is a biweekly podcast dedicated to everything Xbox, brought to you by Tower Casuals and Boss Rush Media. Every other Friday, hosts Corey Dirrig and Josh Finney break down the latest Xbox news, rumors, Game Pass updates, new releases, and more. Catch new episodes every other Friday on all major podcast platforms and on YouTube via the Tower Casuals channel.
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