Microsoft Cancels Perfect Dark and Everwild as The Initiative Shuts Down

Microsoft has officially canceled the Perfect Dark reboot and Rare’s fantasy title Everwild, while also closing The Initiative, the Santa Monica-based studio behind Perfect Dark. The move, part of a sweeping layoff affecting over 9,000 employees worldwide, signals a dramatic shift in Xbox’s first-party development strategy and has left fans and industry watchers stunned.

Here’s the TL;DR…

• Perfect Dark and Everwild have been canceled amid company-wide cuts.

• Microsoft has closed The Initiative, the studio leading development on Perfect Dark.

• Over 9,000 employees have been laid off globally as Microsoft restructures its gaming division.

  

Perfect Dark and Everwild Canceled

Perfect Dark, the much-anticipated reboot of Rare’s classic shooter, has been in development since The Initiative’s founding in 2018. Despite a 2020 reveal and a gameplay showcase in 2023, the game has now been scrapped. According to Variety, Microsoft cited “strategic realignment” and rising costs as key reasons for the decision. Development setbacks, including shifts to outsourced support from Crystal Dynamics, reportedly compounded the challenges, as noted by GamesRadar+.

Everwild, Rare’s long-teased fantasy adventure, has also been shelved. While Rare itself remains operational, the cancellation ends a project that had captivated fans with its ethereal visuals and mysterious world since its 2019 debut. Xbox Studios chief Matt Booty stated in a memo obtained by Variety that the cancellations were necessary to “adjust priorities and focus resources” as the gaming industry evolves.

Booty emphasized that all titles shown during the June 2025 Xbox Games Showcase are still moving forward.

The Initiative Shuts Down

The Initiative, created to develop high-end first-party games for Xbox, has been shuttered as part of Microsoft’s cost-cutting measures. The studio’s closure marks the only complete shutdown among the cuts announced. Windows Central reports that approximately 4% of Microsoft’s global workforce—or about 9,120 employees—have been affected.

Phil Spencer, Microsoft Gaming CEO, stated in a company-wide memo that the layoffs aim to “remove layers of management and improve execution agility.” The Initiative’s staff were not reassigned but offered severance packages and job placement support. With its closure, the future of the Perfect Dark IP remains uncertain.

Fan and Industry Reactions

Reaction from the gaming community has been swift and emotional. On X and in r/XboxSeriesX, fans called the cancellations a “devastating blow” to Xbox’s original content lineup. Many expressed frustration over the loss of two highly anticipated games and questioned the platform’s ability to deliver on ambitious first-party experiences.

Some Reddit users speculated that Microsoft may now shift focus toward third-party partnerships and cloud-based services. IGN reports that while industry analysts view the cuts as a cost-saving measure amid rising development expenses, the loss of creative talent could stall innovation at Xbox Game Studios.

What This Means for Xbox’s Future

Microsoft still has over 40 games in development and appears to be prioritizing “high-impact titles,” according to Booty’s memo. Windows Central suggests upcoming releases may lean more heavily on legacy franchises like Halo and Forza.

With Perfect Dark and Everwild gone and The Initiative closed, Xbox fans are left questioning what’s next. Events like Gamescom 2025 may offer more insight, but the current shake-up signals a pause in Xbox’s more experimental, narrative-driven ambitions.

News compiled and edited by Derek Gibbs and Steven Bubbles on July 2, 2025. Follow us on ClownfishTV.com for more gaming, pop culture and tech news, and consider subscribing for only $5 per month to get access to exclusive podcasts and other content.

Sources:

• Windows Central, “Microsoft is Closing Down Xbox Studio The Initiative,” July 2, 2025

• Variety, “Microsoft Scraps ‘Perfect Dark’ Reboot, ‘Everwild’ and Other Games, Closes Studio The Initiative,” July 2, 2025

• IGN, “Microsoft Closes The Initiative, Cancels Perfect Dark Reboot,” July 2, 2025

• GamesRadar+, “Microsoft Has Closed The Initiative, Cancelling the Perfect Dark Reboot,” July 2, 2025

• r/XboxSeriesX, Community Threads on The Initiative Closure and Project Cancellations, July 2, 2025