In a shocking update to the recent round of layoffs affecting Microsoft employees, another studio has unfortunately found itself on the chopping block.
According to Windows Central, sources told the outlet earlier today that, alongside the cancellation of Rare’s new IP Everwild, The Initiative—the studio handling the newest entry in the Perfect Dark series—would be closing as well, with the project also cancelled. This has now been confirmed by Windows Central.
An internal email from Xbox Game Studios head Matt Booty was shared with Windows Central, wherein he wrote: “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.” Booty added: “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.”
According to Windows Central, one of the “unannounced projects” was ZeniMax’s upcoming MMORPG titled Blackbird, which was intended to succeed The Elder Scrolls Online. Citing their sources, Windows Central reported that everything shown during the recent Xbox Showcase in June is “safe.” However, it has also been suggested by Kotaku’s Ethan Gach that State of Decay 3 studio Undead Labs has also been affected by layoffs.
These cuts come as part of a broader round of layoffs today, as Microsoft reduced its workforce by four percent, resulting in approximately 228,000 employees. It’s a devastating cut that seemingly confirms Microsoft Game Studios co-founder Laura Fryer’s recent video about Microsoft’s chaotic business strategy. In 2023, Microsoft’s largest layoff totalled roughly 10,00 people. The company has laid off almost 15,000 people in 2025.
*Editor’s Note: In the wake of the cancellation of Blackbird, Matt Firor announced on July 3rd, 2025, he would be stepping down as president of Zenimax Online Studios.
