After rumors of Perfect Dark’s cancellation, further reports from Bloomberg and Windows Central have confirmed that its developer, The Initiative, has shut down. The latter also obtained an internal email from Matt Booty of Xbox Game Studios, which also confirmed the cancellation of Rare’s Everwild.
“We have decided to stop the development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio. 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.”
As for the division’s portfolio strategy, Booty says it remains “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.”
While Rare is seemingly bracing for layoffs and other studios, including Forza Motorsport developer Turn 10, have been affected, everything showcased at the recent Xbox Games Showcase is reportedly “safe.” This includes State of Decay 3, despite Undead Labs also allegedly facing an unknown number of layoffs.
Windows Central also noted that marketing and sales, alongside QA teams in Activision and Blizzard, have been affected. However, the company’s plans for next-gen console hardware reportedly remain unchanged. Four percent of Microsoft’s total workforce faced layoffs, affecting about 9,100 employees. Stay tuned for more updates, especially as more studios become aware of the total impact of these changes.