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Microsoft has laid off thousands of workers across its various divisions in the latest cost-cutting measures taken by the corporation, whose 2024 revenue exceeded $245 billion, a 16-percent increase over its 2023 revenue. Though the cuts have impacted several of the company's various divisions, Xbox appears to be hit particularly hard. This represents the fourth time in 18 months that Microsoft Gaming has laid off workers.

"We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace," an Xbox spokesperson said in an official comment provided to Game Informer. Alongside the official statement, Xbox PR confirmed that less than 4 percent of Microsoft's global workforce was impacted. However, according to Microsoft's official reporting, the company employs 228,000 people worldwide, which means 4 percent of the global workforce accounts for more than 9,100 people. Xbox PR also confirmed to Game Informer that the gaming division is impacted, "but not the majority," and stopped short of providing any additional details. When I requested a percentage of Xbox-specific impact, PR could not provide additional context.

However, Variety and several other outlets obtained a memo to Xbox employees from Microsoft Gaming CEO Phil Spencer. Notably, Spencer says, "Our platform, hardware, and game roadmap have never looked stronger," and "Simply put, we would not be where we are without the time, energy, and creativity of those whose roles are impacted." You can see that in its entirety below.

Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.

Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.

HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.

Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.

Phil

Subsequently, The Verge acquired a memo sent by Xbox president of game content and studios, Matt Booty. In his memo, Booty confirms Xbox is closing down The Initiative, an all-new first-party studio founded by Xbox in 2018 in Santa Monica, California. In 2020, The Initiative revealed it was working on a new entry in the Perfect Dark franchise, which is now canceled as a result of this closure. Booty also confirms the Twycross, England-based Rare, which Xbox acquired in 2002 and has worked on titles like Sea of Thieves and Viva Piñata, has been impacted by this round of layoffs, and its new IP, Everwild, which was announced in 2019, has also been canceled. You can read his full memo below.

Following Phil’s note, I want to share more about the changes to the Studios business units.

We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio. As part of this, we are closing one of our studios, The Initiative. These decisions, along with other changes across our teams, reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape. We did not make these choices lightly, as each project and team represent years of effort, imagination, and commitment.

Our overall portfolio strategy is unchanged: build games that excite our players, continue to grow our biggest franchises, and create new stories, worlds, and characters. We have more than 40 projects in active development, continued momentum on titles shipping this fall, and a strong slate headed into 2026.

For those directly affected, we are working closely with HR and studio leadership to provide support, including severance, career transition assistance, and where possible, opportunities to explore roles on other teams.

To everyone across our studios: thank you. Your creativity and resilience continue to define who we are. I believe in the strength of our teams and the direction we’re taking on the path ahead.

Matt

According to Bloomberg, Candy Crush developer King, which Xbox acquired in 2023 as part of the blockbuster $68.7 billion Activision Blizzard King deal, is cutting 10 percent of its staff, which amounts to around 200 jobs, and ZeniMax, which Xbox acquired in 2021 as part of its $7.5 billion acquisition of Bethesda, suffered losses. According to that same report, a new MMORPG that was in development at ZeniMax Online Studios, has also been canceled. Meanwhile, Bloomberg also reports Raven Software, which was acquired as part of the Activision Blizzard King purchase and has worked extensively on recent Call of Duty titles, is also impacted. The Verge also reports that Forza Motorsport developer Turn 10 Studios is also heavily impacted by these cuts, with more than 70 people reportedly laid off.

Microsoft has laid off thousands upon thousands of workers over the last 18 months, including 1,900 employees in January 2024. In May 2024, Xbox closed Arkane Austin, Tango Gameworks, and Alpha Dog Games, and laid off several employees at ZeniMax, all of which were acquired alongside Bethesda in 2021.

Our sincerest well wishes go out to all those impacted by the latest round of cuts.

Update at July 2, 2025, 3:51pm CT:

Aftermath is reporting that Blizzard was also impacted by Wednesday's layoffs. According to an email from Blizzard president Johanna Faries that Aftermath viewed, the company is essentially moving Warcraft Rumble, the 2023 free-to-play mobile game, into maintenance/live-ops mode. This means that while the game will still be supported, no new content will likely be produced.

According to the email viewed by Aftermath, Faries reportedly stated that "several" of the Warcraft Rumble developers are transitioning to new projects, but some were affected by the layoffs. Faries also reportedly mentioned impacts to Blizzard's customer service and marketing departments. According to the report, the number of impacted Blizzard employees could reach as high as 100, with the Overwatch team appearing to escape unscathed this time around.

UPDATE 6:27pm UK: Chris Linn, senior producer at Zenimax Online Studios, has confirmed the cancellation of the unnanounced MMO on LinkedIn.

Linn wrote: "Hi everyone! Our amazing MMO project was just cancelled, I am starting to poke around for new remote work."

Executive producer Sean Dunn wrote his own statement about the cancellation on LinkedIn, stating: "Today was one of the biggest dissapointments of my 35 year long career in games. My dissapointment isn't primarily for myself, but for my team, and for players that will never get to play the amazing game we were building."

Dunn continues: "This team is one of the best groups of people I've been able to work with. They treated each other with kindness and respect on a daily basis. I fell so honored to have been able to help lead them. If you have open roles, please hit me up and I can guide you to the right folks on the team."

"To the team, I just want to say that I love you. You deserve better."

ORIGINAL STORY 6:21pm UK:

The reboot of Perfect Dark developed by The Initiative has been cancelled as part of the latest round of cuts at Microsoft, as well as a new MMORPG project from Elder Scrolls Online maker Zenimax Online Studios.

Earlier today, we reported another round of layoffs across Microsoft, which included job losses at King and Zenimax. Rare's Everwild has also reportedly been cancelled.

Eurogamer now understands Perfect Dark is also among the cuts, confirmed by Bloomberg Journalist Jason Schreier. In addition Bloomberg has reported the MMORPG - code-named Blackbird and in development since 2018 - has additionally been cancelled. Microsoft is yet to officially comment.

The reboot of Rare's series was first announced back in December 2020, and has been in development at new Xbox Game Studios developer The Initiative. After numerous setbacks, Tomb Raider developer Crystal Dynamics was brought in to assist.

"How we make games is evolving," said Microsoft Studios' Matt Booty back in 2022. "The idea of a single team under one roof really doesn't happen that often anymore."

In May 2024, reports suggested "little meaningful progress" had been made since the game's unveiling and the reboot was in "a very rough state".

However, a first gameplay trailer for Perfect Dark was then shown in June 2024 at the Xbox Games Showcase. It showed protagonist Joanna Dark stealthily exploring a near-future Cairo in first-person, with plenty of parkour and spy gadgets.

No release window was given for the game and, now, it appears development troubles have continued, leading to its cancellation.

The original Perfect Dark was released on the N64 by Rare as a spiritual successor to its successful GoldenEye game. A second game, Perfect Dark Zero, was released on the Xbox 360 after Microsoft acquired the developer.

Rumors have been swirling for a while now that Xbox’s flagship series, Halo, might be making the leap to PlayStation in the near future. There have also been rumors about a remake of the OG game. Now, Halo Studios, formerly 343 Industries, has stepped forward to explain that it will provide actual information later this year.

Earlier this month, Xbox boss Phil Spencer ended the company’s Summer Showcase with a tease for what’s coming in 2026, promising a new Fable, a new Gears of War, the next Forza, and hinting at Halo by saying: “and the return of a classic that’s been with us since the beginning.” This followed reports that Halo would leap to PlayStation 5 and Nintendo Switch 2 in 2025. Gears of War is making that leap later this year, so it seems plausible Halo might do the same. The rumors and speculation have grown so large that Halo Studios has directly addressed them in a new blog post.

On June 30, Halo Studios Esports Lead Tahir “Tashi” Hasandjekic shared a blog post about the Halo World Championship happening in October and how people can buy tickets for the event. But the blog post also addressed all the speculation about Halo.

“Over the past few weeks, there’s been a fair amount of speculation about when and where more details might emerge about any of the multiple projects Halo Studios is actively working on,” said Tashi. “We don’t usually comment on such matters, but this time we want to enter the chat and share a little more perspective for Halo fans who might be on the fence about whether to attend this year’s event.”

Tashi explained that last October, during Halo WC, the studio unveiled “A New Dawn,” a short video revealing the news that 343 was becoming Halo Studios and shifting to Unreal Engine. He further explained that “A New Dawn” was “just the beginning” and that at this year’s Halo WC, the team “look(s) forward to continuing the conversation.”

“Speculation is always fun, but if you want the official scoop on what Halo Studios has been working on, you won’t want to miss this year’s Halo World Championship,” said Tashi. “We really hope you’ll join us in Seattle this October!”

So Halo might be coming to PS5. There might be a remake of Halo: Combat Evolved happening. There might be more to share beyond that. But we have to wait until October to find out. Ironically Tashi’s post, meant to address speculation, will likely lead to even more speculation and rumors appearing online. October can’t come soon enough.

A founding member of Team Xbox caused a stir on social media over the weekend after posting a video on YouTube criticising the state of the brand in 2025, and particularly the strategy over the upcoming ROG Xbox Ally handheld.

Laura Fryer, who worked as director of the Xbox Advanced Technology Group back in the 2000s (as well as being an executive producer on the likes of Gears of War and Too Human), spent much of the 12-minute video questioning why the ROG Xbox Ally exists when it doesn't play any exclusive games or offer anything particularly major to set it apart from Xbox consoles, PCs and even other existing PC handheld devices like the Steam Deck and standard ROG Ally.

As part of this, she claimed the "Xbox Anywhere" message will make the ROG Xbox Ally a hard sell:

"The Xbox Anywhere message sounds great on the surface, but in reality it's just marketing. It's style with no substance. Unfortunately, I don't think marketing is going to be enough. There is literally no reason to buy this handheld."

Fryer went on to explain that she's not happy with the way things are going at Xbox in 2025, particularly when it comes to hardware - and she even suggests Xbox's first-party hardware might be "dead".

Here's a bit more of her closing statement:

 "Obviously, as one of the founding members of the Xbox team, I'm not pleased with how things are today. I don't love watching all the value that I helped create, slowly get eroded away. I'm sad, because from my perspective it looks like Xbox has no desire or literally can't ship hardware anymore, so this partnership is about a slow exit from the hardware business completely. Personally, I think Xbox hardware is dead."

Not everything she says here is negative, but it's admittedly pretty brutal for the most part! Her more positive outlook centres around Xbox Game Pass, pointing out that it has great value, while also acknowledging that Xbox can make a lot of money from their "deep portfolio" - using remasters of titles like The Elder Scrolls IV: Oblivion as an example.

And, with the 25th anniversary of Xbox coming up, she questions whether 2026 could "maybe" be the year that the "fog will clear and all of us will see the beauty in these latest announcements". Again here's a bit of what she says about this:

 "Next year marks the 25th anniversary of the Xbox, and I'm sure they will have some big announcements and plans for honouring the milestone. Maybe next year is the year? Maybe next year is the year that the fog will clear and all of us will see the beauty in these latest announcements. I guess we'll just have to wait and see."

So, there you go. The full video is at the bottom of the article if you want to hear Fryer's thoughts in full, and it's definitely an interesting watch. We're certainly more optimistic than she is right now, so here's hoping 2026 changes her mindset!

Personally, I can't agree that there's "no reason" to buy the ROG Xbox Ally handheld — it's going to be an ideal entry point for Xbox fans interested in PC handhelds, and potentially the best Windows handheld on the market in terms of performance and battery life — but I also understand her point about it lacking exclusive content.

In terms of other hardware, Xbox unveiled a next-gen console strategy just a couple of weeks ago, but it remains to be seen how much of this will be first-party rather than partnership-based devices like the ROG Xbox Ally.

Anyway, what about you? What do you make of these thoughts? Let us know down in the

Void Interactive has confirmed the console port of its violent shooter, Ready or Not, has been changed "as absolutely required by our first party partners", including tweaks to dismemberment/gore, nudity, mistreatment of children, and "explicit representations of violence". And in some instances, these changes may be applied to the PC version, too.

In an update posted to Steam, the team said that after some changes, the game secured a PEGI 18 / USK 18 / ESRB M-rating, and was "fortunate enough [...] to pass certification for the launch on our first submission". Void was now "relieved" to be finished with the console launch certification process and says any changes made "remain faithful to the original tonality of the game".

Ready or Not - Weight of the badge | Console Release Date Trailer

Ready or Not – Console Reveal Trailer (PS5/Xbox Series X | S).Watch on YouTube

"Maintaining multiple versions of the game with different assets and system mechanics increases the likelihood of bugs to occur in future updates, and subsequent challenges keeping the game updated across multiple versions," the team explained, justifying why it's had to tweak the PC version, too. "Think lighting or optimisation issues, for example (or any number of unexpected bugs from maintaining different versions).

"If the in-game assets were not the same, it would make crossplay unusable; the game content must be equal or basically equal for multiplayer to work. Different versions of assets affects multiplayer replication, which is the ability for the server to understand what’s happening in-game and host players in the same lobby/server."

Player-induced dismemberment "still has a large presence" in the game, "but is a little more limited as to when it occurs", and you can't, for example, keep dismembering an enemy once it's dead. Tangentially, character art "involving torture were turned down slightly to be less over-the-top". The team has also had to "cover up" some characters "a bit more".

"Although we already make a substantial effort to present mistreatment against children in the game in a responsible way, we made slight thematic expansions of this philosophy in order to better meet certification standards," the team explained when it came to violence against children. "For example, the child on Twisted Nerve has had an animation change to be unconscious/sleeping, instead of the previously convulsive animation from before that had a violent appearance.

"The changes with the console version are small enough that most people here wouldn't notice if we didn't say anything, but we want to be transparent. It's largely just evidence and nudity that's altered, and the texture changes don't affect the PC version." In-game evidence of "illicit child stuff" has also been censored, but only in the console version.

Some fans have responded to the changes by review-bombing the game on Steam, citing "cowardly" "censorship".

Ready or Not will release for consoles on 15th July, 2025.

Void Interactive lost the publisher for Ready or Not days after it confirmed the game would include a school shooting mission. The game was released in early access on 17th December, but in a statement on Twitter shortly afterwards, Void Interactive said it had parted ways with publisher Team17.

Though no reasons were given at the time, the change came shortly after a developer responded to a Reddit post about including a school shooting with the statement: "You better believe it's gonna". Ready or Not was also briefly taken offline in 2022 following a trademark dispute.

Players have hit out at The Alters developer 11 Bit Studios after AI prompts were discovered in both subtitles and flavour text in the game, intimating routine use of large language models (LLMs) without disclosure.

Since January 2024, Valve has required games that use pre- or live-generated AI to divulge this as part of the Steam Distribution Agreement. This includes art, code, sound, and more that have been created with the help of AI tools. At the time of writing, The Alters has made no such disclosure.

In one example, an in-game screen that's presumably there to look all sci-fi-y and scientific begins with: "Sure, here's a revised version focusing purely on scientific and astronomical data".

Another commenter who'd played through with subtitles on Brazilian Portuguese noted "several times the subtitles go crazy", which was later backed up with a screenshot that evidenced it. The subtitle read: "Sure! The text translated to Brazilian Portuguese is: Every conversation two people can have, right? So we-"

"The game is using AI-generated content without a proper Steam Page disclaimer!" said another player on Steam. "This is absolutely unacceptable. 11 bit studios has been caught using AI in The Alters without ANY disclaimer on the Steam page.

"Steam requires developers to disclose AI use for a reason. We have the right to know what we're buying. If you're going to use AI to create content, be honest about it instead of trying to hide it."

Not all players have taken umbrage, however. "You realise this is tiny text on a background prop, and only exists as a graphic and not as something you're expected to actually read," someone replied. "In the past things like that could have Ipsum etc stuff on it, or random gibberish. This isn't even slightly an issue.

"You may have a point regarding the translations, if those were indeed AI generated. But to use this screenshot as an example of AI generated content is a joke."

Game localisation specialist Lucile Danilov, however, had a different take.

"Look, I love The Alters. It's brilliantly written, and I was planning on leaving it a glowing Steam review once I was done. But this is a disgrace. Seriously, leaving parts of an AI prompt in the lockit?! Talk about spitting in the face of your international audience!

"According to the OP, some parts of the PT-BR translation are also riddled with errors and inaccuracies, which is appalling considering how the whole game revolves around an intricate narrative."

Danilov posited that the mistake was either the work of a "careless translator taking shortcuts", or it was "done by someone on the dev/publisher side who couldn't be arsed sending last-minute missing lines for translation and decided to throw them in a random LLM without oversight".

Handong Ryu, who handled the Korean translation for the game, replied: "I was responsible for translating the vast majority of the Korean version of The Alters. Unfortunately, the same issue exists in the Korean version as well, which makes it more likely that the second scenario you mentioned is closer to the truth. While no AI prompt has been exposed, I can confirm that the same section of the Korean localisation shows clear signs of having been run through an LLM without proper editing.

"There has been significant backlash from the Korean gaming community, and it has been really disheartening to witness, especially since the criticism stems from a part of the game I had no control over."

At the time of writing, 11 Bit has not publicly addressed the allegations or responded to player comments. Earlier this week, Jurassic Park Evolution 3 removed generative AI for scientists' portraits in Jurassic World Evolution 3, "following some initial feedback".

"There's something startlingly unique about what 11 Bit Studios does in its games, and the moral quandaries it puts us in, and this clone story in The Alters is no exception," Bertie wrote in Eurogamer's The Alters review, awarding it 4 out of 5 stars.

"It takes us to the strange places I hoped it would, and prods and probes and makes me think about what I value in life. It's uneven at times, and some ideas feel underdeveloped, but then, I remember, this merging of ideas is new, and that's what I like so much about it."