Microsoft has cancelled two major projects in its Xbox division and closed one of its developers.
Windows Central reports that studios boss Matt Booty (pictured) told staff in an email that it was winding down several projects across its stable. These include Perfect Dark and Everwild, being made by The Initiative and Rare, respectively. There are some unknown projects being cancelled, too, one of which might be ZeniMax Online's MMO Blackbird.
If that wasn't enough, Microsoft is closing The Initiative. The company opened the Santa Monica studio back in 2018 with Crystal Dynamics vet Darrel Gallagher at the helm.
The Perfect Dark reboot was seemingly making slow progress in development, while Everwild has been in the works one way or another since 2014.
"We have made the decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio," Booty wrote.
"As part of this, we are closing one of our studios, The Initiative. These decisions, along with other changes across our teams, reflect a broader effort to adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape. We did not make these choices lightly, as each project and team represent years of effort, imagination, and commitment.
"Our overall portfolio strategy is unchanged: build games that excite our players, continue to grow our biggest franchises, and create new stories, worlds, and characters. We have more than 40 projects in active development, continued momentum on titles shipping this fall, and a strong slate headed into 2026.
"For those directly affected, we are working closely with HR and studio leadership to provide support, including severance, career transition assistance, and where possible, opportunities to explore roles on other teams.
"To everyone across our studios: thank you. Your creativity and resilience continue to define who we are. I believe in the strength of our teams and the direction we're taking on the path ahead."
