Just under two weeks ago, Microsoft announced it was laying off 9,000 employees across its workforce and revealed it had cancelled ZeniMax Online Studios' new MMORPG codenamed Blackbird (along with Rare's Everwild and the Perfect Dark reboot, with the latter's development studio The Initiative shuttered). Now, a report suggests ZeniMax devs who worked on the game will soon be affected by the Xbox cuts.
The news comes from Bloomberg's Jason Schreier, who wrote a post on social media in response to an article citing a recent statement from ZeniMax Online Studios' union and claiming none of its workers have been laid off.
"I'm seeing this headline make the rounds on Reddit but it is incredibly misleading," he said, before fully clarifying the situation. "The people who worked on Blackbird at ZeniMax Online Studios are only still employed while their union negotiates a severance package. Almost all of them are losing their jobs. Just hasn't formally happened yet."
The misunderstanding Schreier was addressing stemmed from a recent communiqué from ZeniMax Online Studios United-CWA — the union the developer formed under Xbox in December. In the memo, it was stated that developers working on Blackbird had not yet been let go.
I'm seeing this headline make the rounds on Reddit but it is incredibly misleading. The people who worked on Blackbird at ZeniMax Online Studios are only still employed while their union negotiates a severance package. Almost all of them are losing their jobs. Just hasn't formally happened yet
— @jasonschreier.bsky.social (@jasonschreier.bsky.social.bsky.social) 2025-07-15T20:27:22.088Z
"Earlier this month, Microsoft indefinitely shelved an unannounced MMORPG at ZeniMax Online Studios, a shock to the 222 ZOSU-CWA developers working on the project," the statement reads.
"Undoubtedly, a future has been stolen from many of us and our community will never experience an amazing game. However, despite discussions regarding the status of our employment, the fact is: we have not yet been laid off."
Assuming Schreier's reporting is accurate, it's evident that the keyword here was "yet," and that the cuts set to affect the studio won't formally go through until severance pay negotiations between ZOSU-CWA and Microsoft conclude. Notably, this was something the union highlighted as a possibility towards the end of its memo.
"It is true that a layoff may be in the future for some of our members," the organization wrote. "However, as a result of our organizing, we are able to ensure that those impacted will be able to depart with dignity."
Little is known about the now-defunct Blackbird project, though it had been in development since 2018. Bizarrely, the new MMO from The Elder Scrolls: Online maker was loved by none other than Microsoft Gaming CEO Phil Spencer, who reportedly couldn't stop playing it months before its cancellation.
As more layoffs loom, I can only hope for the best
It's upsetting to learn that, according to Jason Schreier's sources, there are even more layoffs soon to come under Microsoft and Xbox. As revealed by ZOSU-CWA's statement, 222 employees that contributed to Blackbird have banded together in the union; given that, reportedly, "almost all of them are losing their jobs," it seems all-but-guaranteed that the studio will be hit hard.
The one silver lining present here, however, is that ZOSU-CWA is fighting to ensure every affected worker is adequately supported with severance pay and other benefits they can rely on as they search for new employment. The value and importance of unionization is on full display here, even if ZOSU-CWA ultimately can't save the jobs of its developers.
This is yet another piece of troubling Microsoft and Xbox news in the aftermath of this month's layoffs, adding onto a report that Halo Studios was affected by them as concerns about the next Halo game rise. In the wake of the cuts, Microsoft also used an embarrassing AI-generated image in a hiring ad for the Xbox Graphics division.
