In a significant corporate restructuring, Microsoft is implementing substantial job cuts, with particular focus on its Xbox gaming division and global sales teams.
These widespread layoffs come as the tech giant intensifies its strategic shift towards artificial intelligence, reallocating resources and streamlining operations to align with its ambitious AI investments.
Amidst these widespread redundancies, particularly within its Xbox division, sources suggest that Everwild, the long-anticipated title from UK-based developer Rare, has been cancelled, adding to the growing concerns within the company's gaming operations.
Microsoft's Shifting Gaming Landscape
Microsoft has confirmed a new wave of job cuts this year, affecting approximately 9,100 employees, which represents around 4 percent of its global workforce, as reported by The Seattle Times.
The company's gaming division, known as Microsoft Gaming (including Xbox), is significantly impacted by these redundancies. However, the precise number of roles and specific teams affected within this division have not yet been fully disclosed.
In a message to his team, Xbox chief Phil Spencer explained that the company would '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' to ensure 'enduring success and allow us to focus on strategic growth areas.'
Bloomberg: Microsoft Begins Deep Job Cuts Across Xbox Division
— Wario64 (@Wario64) July 2, 2025
Job cuts at King (10% of staff or about 200 jobs) and ZeniMax in Europe. US Units expected to be told later today on number of job cuts https://t.co/r9ELdCHY8o
Windows Central: Phil Spencer's message to staff… pic.twitter.com/A1E1LF7ymJ
According to a Bloomberg report, Microsoft's King division, creators of the popular game Candy Crush, is reducing its workforce by approximately 10 per cent, impacting around 200 employees. Other European units, including Zenimax, have also confirmed job cuts as part of this restructuring.
Continued Workforce Adjustments
These significant job cuts follow closely on the heels of previous reductions; Microsoft announced over 6,000 redundancies less than two months ago, with an additional 305 cuts implemented in early June.
Throughout the past year, Microsoft employees have faced a series of layoffs, including performance-based reductions, which, according to several employees, have had a severely detrimental impact on morale.
Microsoft continued its workforce reductions with 1,900 layoffs across Activision Blizzard and Xbox in January 2024. This was followed by the closure of several game studios and associated job losses in May.
Then, in June, approximately 1,000 roles were cut from its HoloLens and Azure cloud teams. Additionally, Microsoft reduced its Xbox workforce by another 650 employees in September, as part of a broader restructuring following the acquisition of Activision Blizzard.
These extensive workforce reductions coincide with other significant developments within Microsoft's gaming arm, leading to further industry speculation. Adding to the news of widespread layoffs, reports indicate that Rare's long-anticipated title, Everwild, has reportedly been cancelled.
Rare's Everwild Reportedly Shelved Amidst Restructuring
Everwild, a game from Sea of Thieves developer Rare that has been in development for several years, has reportedly been cancelled. The news was initially shared by Bloomberg's Jason Schreier on Bluesky and subsequently corroborated by other publications, including VGC.
BREAKING: As part of today's cuts, Xbox has canceled the troubled Rare game Everwild, according to people familiar. News on the job cuts is coming in drips — not sure why Xbox didn't announce it all at once — but I'll report what I can as I confirm it.
— Jason Schreier (@jasonschreier.bsky.social) 2025-07-02T14:04:33.426Z
Including its prototype phase, Everwild had been in development for over a decade. Anonymous developers have indicated that the team struggled to establish a clear direction for the game, even after a recent project reboot.
Rare initially announced Everwild in November 2019, followed by another trailer in July 2020. Details about the game remained scarce in the subsequent years, except for Xbox head Phil Spencer's assurances earlier this year that 'progress' was being made on the title.
Founded in 1985, Rare stands as one of the UK's most historic game developers, celebrated for titles such as Battletoads, Donkey Kong Country, GoldenEye 007, and Banjo-Kazooie. Microsoft acquired Rare in 2002, and the studio has since developed titles like Kameo, Viva Piñata, Kinect Sports, and Sea of Thieves as part of Xbox Game Studios.
