Perfect Dark Reboot Axed in Microsoft Layoffs, Devs Shut Down

The highly anticipated Perfect Dark reboot has been officially scrapped, with Xbox studio The Initiative shutting its doors amid devastating Microsoft-wide layoffs, sources exclusively revealed to IGN.

Microsoft's Gaming Division Faces Major Restructuring

These dramatic developments come as Microsoft initiates sweeping workforce reductions expected to impact over 9,000 employees across the company. Reliable sources confirm Rare's Everwild project has also been canceled following cuts at the historic UK studio, with King's Candy Crush division and Bethesda's London office facing significant staff reductions.

Perfect Dark's conspicuous absence from Microsoft's June 2025 showcase now makes grim sense - just twelve months after revealing an impressive gameplay trailer showcasing protagonist Joanna Dark's return. The Initiative, founded in 2018 specifically to helm the Perfect Dark revival, had brought on Crystal Dynamics (of Tomb Raider fame) for development support.

Xbox chief Phil Spencer addressed staff via internal memo obtained by IGN, carefully avoiding specifics while acknowledging the difficult decisions: "We must make choices now for continued success in future years."

The Full Statement from Xbox Leadership

Gaming staff received the following message from Phil Spencer today:

Today we are making organizational changes to position Gaming for long-term success. As we concentrate on strategic priorities, we're reducing operations in certain areas while streamlining management structures for greater efficiency. Team leaders will provide details about specific changes in coming days.

These decisions come at a time of record engagement across our platforms, hardware, and game portfolio. Our current strength results from previous difficult choices. To sustain this momentum, we must focus resources on our highest-potential opportunities while meeting corporate expectations - this disciplined approach ensures we can deliver extraordinary experiences for generations of players.

While necessary, these changes don't diminish our appreciation for impacted employees' contributions. Our HR team is providing comprehensive transition support including severance packages, healthcare continuation, and priority consideration for other Microsoft Gaming opportunities.

We move forward with profound gratitude for everyone who has helped build our gaming community.

Phil

Xbox's Shifting Portfolio After Activision Acquisition

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Since closing its $69 billion Activision Blizzard acquisition, Microsoft has implemented multiple rounds of cuts across its gaming division - eliminating 1,900 positions in January 2024, shuttering Arkane Austin and Tango Gameworks months later, then cutting 650 more jobs by September 2024. The May 2025 reduction of 6,000 staff (3% of global workforce) preceded today's announcement, marking the fourth major restructuring in 18 months.

As Spencer told IGN last June: "Running a sustainable business sometimes requires unpopular decisions - the kind no one enjoys making but that leadership must ultimately make."

These cuts coincide with Microsoft preparing next-generation Xbox hardware and maintaining a strong gamescom presence, signaling strategic reprioritization despite the human cost.