Yet another round of layoffs is set to impact the game industry, this time taking place across the entire company at Microsoft.
According to Variety, Microsoft is set to cut four percent of its workforce worldwide—which was previously approximately 228,000 employees. While these cuts will take place across the entire company, it has been confirmed that these layoffs will reverberate through Microsoft’s gaming division, following rumours that the axe was falling.
In an memo obtained by Vareity, Microsoft Gaming cheif Phil Spencer said, “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.” Spencer went on to say specific details would be shared with team leaders in the coming days, “out of respect for those impacted.”
Almost immediately after these layoffs were confirmed, it was also announced that Rare’s upcoming original IP, Everwild, has been cancelled as the company has been affected by the cuts. Sources told VGC that “employees are likely to lose their jobs as part of [a] broader restructuring of the Sea of Thieves developer.” Development on Everwild had been somewhat tumultuous, with Rare announcing the game back in 2019 and releasing a trailer for the game in July of 2020. Despite going quiet on progress, during an interview with XboxEra, Phil Spencer confirmed the game was still in active development back in February of this year.
This announcement comes right in the wake of a pointed criticism of the company’s seemingly chaotic decisions from former Microsoft Game Studios co-founder Laura Fryer, who suggested, among other things, that the company didn’t seem interested in making hardware and isn’t really producing first-party titles anymore.
This is yet another in a long trend of layoffs happening at Microsoft. Despite spending 68.7 billion dollars to acquire Activision Blizzard, the company removed 1,900 staff members in January 2024, then made more cuts when it closed Arkane Austin and Tango Gameworks. Following this, in May 2025, Microsoft cut an additional 6,000 staff—three percent of its entire workforce.
