Reports and rumors of massive layoffs at Xbox have been building since late last month, and the first blood has now been spilled. Bloomberg reports that Candy Crush maker King is cutting 200 employees, or roughly 10 percent of its 2,000-person headcount, while multiple games across various Xbox studios, including the Perfect Dark reboot, have been canceled.
The Seattle Times reports that this is part of a larger 9,100-person cut to personnel across the tech giant. “We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace,” a Microsoft spokesperson told VGC, with Microsoft Gaming CEO Phil writing in a memo to staff that the layoffs “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.”
King is part of Activision Blizzard, which Microsoft officially acquired in late 2023 for $70 billion after an extensive and brutal regulatory battle over concerns about market consolidation. Candy Crush, one of the most popular free-to-play mobile games in the world, had just reached 20 billion in lifetime revenue at the time, making it one of the most lucrative parts of the sale. It will also likely be the cornerstone of a long-threatened push to launch its own app store on smartphones following anti-trust losses by Apple and Google.
Everwild, an action-adventure in production at Rare and revealed years ago for the Xbox Series X/S was also canceled. The new IP from the Sea of Thieves maker was last seen at Microsoft’s 2020 gaming showcase, with reported reboots and leadership changes following years later after nearly a decade in development. A new MMORPG codenamed Blackbird from Elder Scrolls Online maker ZeniMax Studios was also canceled today after a lengthy production timeline, Bloomberg reported. Kotaku understands that cuts are underway at State of Decay 3 studio Undead Labs as well.
The current wave of mass layoffs hitting Xbox follows multiple other rounds that Microsoft has implemented in the wake of its gaming acquisition spree. Nearly 2,000 staff across the gaming division were cut in January 2024, followed by the closures of critically acclaimed studios like Tango Gameworks and Arkane Austin in May. Around 600 more layoffs followed in September, with Microsoft saying at the time that no games were canceled as a result of that round of cuts.
That’s unlikely to be the case this time around, with the full extent of the culling rumored to potentially include entire studios. Microsoft’s expansive portfolio of game development teams includes ones like Obsidian Entertainment which have prodigiously shipped almost half a dozen games since being bought, as well as others like Undead Labs which have spent years working on sequels that have yet to materialize. Xbox has also been retreating from its console hardware business amidst reported pressure to improve its bottom line, leading to major first-party exclusives like Sea of Thieves and Gears of War going multiplatform on PlayStation 5.
“We’re accountable to Microsoft for running a good business, a healthy business that continues to grow at both top line and bottom line,” Spencer said at Summer Game Fest in June, hinting at the current upheaval. “That’s kind of a foundation for us. And what that does is it allows us to continue to invest in Xbox for our community of players and creators and that we’re doing it. It does mean we have to make trade-offs through the year on things that we’re going to invest more in, things that we’re not going to invest as much in because...we are the business that we are.”
Update 7/2/2025 12:28 p.m. ET: Added further info about cuts and cancelations.
Update 7/2/2025 1:18 p.m. ET: Added info about Perfect Dark.
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