Microsoft layoffs: Why Perfect Dark reboot was canceled and The Initiative studio closed
On Wednesday, Microsoft announced its decision to lay off thousands of workers, marking its second mass layoff in months as well as its largest in over two years.
Without mentioning the total number of people who would be laid off, the tech giant has started sending out notices. The layoff heavily impacts Xbox video game business and other divisions. The company said that the latest round of layoffs comprise less than 4 per cent of the workforce it had a year ago, The Associated Press reported.
Microsoft had nearly 228,000 full-time workers as of June last year, the last time when it reported its annual headcount. This means that its latest layoffs would be about 9,000 people, reports said.
Microsoft has decided to shut The Initiative studio, which was developing the Perfect Dark reboot. The game was in the works for nearly seven years. This was the only studio that has been shut at Microsoft Gaming and Xbox, Variety reported. Interestingly, the company has not closed the studio behind the now-scrapped Everwild game that was being developed for almost a decade now.
Microsoft is not the only company in the video game industry that has announced layoffs. Its major competitor, Sony's PlayStation, has already been through five rounds of trimming down the total strength in the last two years, besides shutting down three studios, according to Variety.
In his memo, Matt Booty said that there 40 projects in active development at Xbox. As per reports, all the games featured during the Xbox Games Showcase presentation in June are moving ahead with their production.
Announcing the latest decisions, Booty said it "reflects a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape."
Candy Crush maker King and Bethesda's London office are also believed to have hit hard with the layoffs, IGN reported.
Those who have been affected directly will be provided support, "including severance, career transition assistance, and where possible, opportunities to explore roles on other teams," Booty stated. FAQs 1. How many employees were laid off by Microsoft in May?
In May 2025, the company cut 6,000 staff, which was roughly 3 per cent of its workforce. 2. Who all are impacted by the latest layoffs at Microsoft?
This includes the Xbox video game business, sales and other key divisions. 3. How many people have been removed by Microsoft now?
The company stated that the latest layoffs will cut about 4 per cent of its workforce, or nearly 9,000 people.
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