In a statement, Xbox Game Studios’ Matt Booty said the decisions “reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape”.
Santa Monica, California-based The Initiative was established in 2018 by former Crystal Dynamics boss Darrell Gallagher, along with a host of veteran developers. Perfect Dark was to be the studio’s first title.
Xbox finally showed gameplay for the Perfect Dark reboot last summer, four years after its announcement. According to reports, the game had been through a challenging development. VGC reported in March 2022 that the Xbox studio had seen a “fast and furious” wave of senior departures over the previous year.
In a company-wide email announcing The Initiative’s closure, Microsoft also confirmed the cancellation of Rare’s Everwild, which VGC exclusively reported earlier today.
“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 Booty, Xbox Game Studios
Microsoft confirmed a significant wave of layoffs on Wednesday, which could reportedly see as much as 4%, or roughly 9,100, of the company’s total employees, across all departments, including gaming, affected.
