Microsoft has laid off approximately 9,100 employees, about 4% of its global workforce, with its gaming division once again taking a major hit. According to IGN, the cuts impacted multiple studios, including King, Bethesda, and Rare—where the long-in-development title Everwild has reportedly been canceled.
The layoffs were announced in an internal memo from Xbox boss Phil Spencer, who told staff the company is “ending or decreasing work in certain areas” and “removing layers of management” to refocus on strategic growth. While Spencer didn’t confirm specific projects, team leaders were instructed to follow up with affected employees.
VGC also reports that Rare’s Everwild was officially shelved as part of the restructuring. The project, first revealed in 2019, had seen multiple reboots over the years. Spencer himself had expressed excitement about it in mid-2024, telling XboxEra he had recently visited Rare to check in on development progress. That visit would be one of the last before the game’s cancellation.
The layoffs are part of a broader pattern for Microsoft’s gaming division. Since completing its $69 billion acquisition of Activision Blizzard, the company has enacted four rounds of cuts in just 18 months. That includes 1,900 layoffs in January 2024, followed by the closure of Arkane Austin and Tango Gameworks, another 650 roles cut in September, and 6,000 employees let go in May 2025. With this latest round, Microsoft has now laid off over 17,000 employees across its gaming and broader tech operations in less than two years.
King of Activision Blizzard King and best known for mobile puzzle game Candy Crush, was reportedly hit particularly hard—losing around 10% of its Barcelona workforce. Bethesda’s London office was also affected, although exact numbers haven’t been disclosed.
Despite the heavy toll, Spencer emphasized in his memo that these decisions were not a reflection of employee performance. “These decisions are not a reflection of the talent, creativity, and dedication of the people involved,” he wrote. Impacted employees will receive severance packages, healthcare benefits, and job placement support, and will be prioritized for other open roles within Microsoft Gaming.
This shake-up comes just as Microsoft publicly reaffirms its commitment to Xbox, Game Pass, and next-generation hardware. In a June 2024 interview with IGN, Spencer acknowledged the balancing act: “I have to run a sustainable business… that means sometimes I have to make hard decisions that frankly are not decisions I love.”
With Everwild canceled and more studios impacted, the cuts raise fresh questions about the future direction of Xbox’s first-party lineup. For now, Microsoft appears to be consolidating—focusing on fewer, high-impact projects while trimming away anything less certain.
