Microsoft’s Lay-Offs Also Affected Xbox Publishing Division, Involved Producers and Leader – Rumour

Among the projects affected by Microsoft's project cancellations and lay-offs was reportedly one by Romero Games that was revealed in July.

Posted By | On 08th, Aug. 2025

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While recent reports have revealed that Avalanche Studios has stopped development on its co-op action-adventure title Contraband, a new report courtesy of Game File’s Stephen Totilo indicates that it was one of many such cancellations at Microsoft that hadn’t yet been made fully public. While Microsoft had cancelled several projects, including Rae’s Everwild and The Initiative’s Perfect Dark, the report indicates that more projects had been affected that were less widely reported.

These projects include some under Xbox’s publishing division which worked with third-party studios to help release their games. In the past, the publishing division had worked with Interior Night on As Dusk Falls, and with Dontnod on Tell Me Why. According to Game File, the publishing division was “significantly impacted”, with multiple producers being let go. The division has also lost its leader Peter Wyse.

The publishing division being impacted by these job cuts was also reportedly related to Romero Games announcing that its project had been cancelled by its unnamed publisher. Studio CEO Brenda Romero had made this announcement back in early July, confirming that funding for the unannounced project had been cancelled. She also mentioned that this decision had been made at a “high level within the publisher” that was out of the control of Romero Games itself.

“We have some difficult news to share,” posted Romero. “Last night, we learned that our publisher has canceled funding for our game along with several other unannounced projects at other studios. This was a strategic decision made at a high level within the publisher, well above our visibility or control. We deeply wish there had been something, anything, we could have done to prevent this outcome.”

“This absolutely isn’t a reflection of our team’s work, performance, or the quality of the project itself. We hit every milestone on time, every time, consistently received high praise, and easily passed all our internal gates. We are incredibly proud of the work being done, and of the talented team behind it. The best we’ve worked with.”

In a follow-up announcement, Romero Games had announced that it was not shutting the studio down despite the project losing its funding. In a post, the studio confirmed that it “is not closed, and we are doing everything in our power to ensure that it does not come to that.” The studio continued: “Any suggestion otherwise is factually incorrect. Indeed, we were in the studio today to discuss next steps with the team.”

As for what the studio’s next steps, it had confirmed that, due to the funding being cancelled, its leadership was reassessing what it could do, and this also meant taking a harder look at the entire staffing at Romero Games.

“The funding for our project was pulled, and our game was cancelled,” said the studio in a statement. “Due to confidentiality agreements, we cannot disclose the publisher’s identity, though some may infer it from public information. As a result, we now have to reassess the entire staffing of our studio.”

As for Microsoft, the company is still reportedly going forward with publishing Kojima Productions’ OD and Koei Tecmo and PlatinumGames’ Ninja Gaiden 4. Flight Simulator is also reportedly not in any danger for now.


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