Microsoft has cancelled the highly anticipated Perfect Dark reboot and closed its developer, The Initiative, as part of a massive wave of layoffs affecting the Xbox division. The news, confirmed by Xbox Game Studios head Matt Booty in an internal email, comes alongside the cancellation of Rare’s Everwild and several unannounced projects, including ZeniMax Online’s MMORPG Blackbird. The layoffs, impacting around 9,000 employees (4% of Microsoft’s global workforce), were announced on July 2, 2025.
The Initiative, founded in 2018 in Santa Monica, California, was tasked with reviving the iconic Perfect Dark franchise, originally a Nintendo 64 classic by Rare. The reboot, announced at The Game Awards 2020, aimed to blend first-person shooter, stealth, and immersive sim elements with protagonist Joanna Dark in a near-future, eco-sci-fi setting.
Despite a promising gameplay trailer at the 2024 Xbox Games Showcase, the project faced a troubled development cycle, marked by leadership changes, a 2022 restart on Unreal Engine 5, and reported clashes between The Initiative and co-developer Crystal Dynamics. The partnership with Crystal Dynamics has now ended.
Booty’s email stated the cancellations and studio closure reflect a “broader effort to adjust priorities and focus resources” in a changing industry landscape. Affected employees will receive severance, healthcare benefits, career transition support, and priority consideration for other Xbox roles.
Other studios hit by layoffs include Turn 10 (Forza Motorsport, nearly 50% staff reduction), King (Candy Crush, ~200 job cuts), and Bethesda’s London office, with cuts also affecting Call of Duty teams like Raven Software.
However, games showcased at the June 2025 Xbox Games Showcase, such as Clockwork Revolution and State of Decay 3, remain safe.
The cancellation of Perfect Dark, a fan-favorite IP, and the closure of The Initiative after seven years without releasing a game have sparked frustration among fans and developers. Social media posts on X reflect disappointment, with some calling the decision a “waste” after the promising 2024 trailer.
Microsoft’s focus appears to be shifting toward its biggest franchises and Game Pass, raising questions about its commitment to new IPs and Xbox’s future in the gaming industry.