Microsoft’s Xbox division is undergoing a major round of layoffs that will affect multiple studios, including Rare, with reports indicating the cancellation of the long-expected game Everwild. This update shakes up Xbox’s plans and could impact the broader gaming community.
Layoffs Hit Xbox and Key Studios
According to Bloomberg journalist Jason Schreier, the layoffs at Xbox have officially started. King, the developer behind Candy Crush, is cutting about 10% of its staff—roughly 200 jobs. Meanwhile, some employees at Zenimax, known for Bethesda titles like Starfield and Fallout, have also been affected.
BREAKING: The new MMORPG project from Zenimax Online Studios, maker of Elder Scrolls Online, has been canceled as part of the Xbox layoffs, sources tell Bloomberg News. The project, code-named Blackbird, had been in development since 2018. Still more news to come this morning.
— Jason Schreier (@jasonschreier.bsky.social) 2025-07-02T15:05:30.540Z
Xbox employees in the United States are expected to be informed of job cuts soon. The layoffs are part of a broader Microsoft initiative that will result in up to 9,100 job cuts across the company, as reported by The Seattle Times.
Rare’s Everwild Cancelled
Sources cited by Video Games Chronicle reveal that Rare, the UK-based studio behind Everwild, is impacted by the layoffs. so, Everwild has reportedly been cancelled. Although the game was never announced for the PS5, it might have been ported eventually if it had launched.
Phil Spencer’s Message to Xbox Staff
Xbox chief Phil Spencer addressed employees in an internal email, acknowledging the tough decisions. He emphasized that despite the layoffs, Xbox currently enjoys more players, games, and gaming hours than ever. Spencer stresses the importance of focusing on strategic growth areas and prioritizing opportunities with the greatest potential.
“I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities.”
He also expressed gratitude to those who lost their jobs, noting that their contributions were crucial to Xbox’s current momentum.
What This Means for Xbox and Beyond
After Xbox started porting its titles to PS5 and Nintendo Switch, it’s becoming more of a third-party publisher than a pure hardware maker. These layoffs and project cancellations could affect future game releases across platforms. The situation is evolving, with potential for more job cuts and even studio closures.
Wow, layoffs and cancellations always hit hard. Do you think Microsoft’s strategy will pay off in the long run? And what does this mean for Rare’s fans who were awaiting Everwild? Feel free to share your thoughts below.
