According to a recent Windows Central report, Microsoft Gaming will shut down Santa Monica studio The Initiative. Additionally, due to this closure and mass layoffs, the previously announced Perfect Dark reboot has been cancelled. Xbox Games Studio head Matt Booty sent an internal email to staff confirming several unannounced projects and games have been canceled.
The full email:
Following [Microsoft Gaming CEO] Phil [Spencer]’s note, I want to share more about the changes to the Studios business units.
We have made the decision to stop 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.
Our overall portfolio strategy is 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.
For those directly affected, we are working closely with HR and studio leadership to provide support, including severance, career transition assistance, and where possible, opportunities to explore roles on other teams.
To everyone across our studios: thank you. Your creativity and resilience continue to define who we are. I believe in the strength of our teams and the direction we’re taking on the path ahead.
More than doubled previous record.
According to former employee accounts.
According to a recent report.