Xbox plunges into a new crisis with cuts, cancellations and closing of studios

In early July, Microsoft announced a new wave of large -scale discharge that directly affects its video game division. The company has revealed that it will dismiss about 9,000 workers, representing approximately 4% of its workforce worldwide. This decision is part of a broader process of internal restructuring, with the objective of optimizing resources and strengthening investments in strategic areas such as artificial intelligence. The most visible effects are, however, on the Xbox Game Studios, where a significant slice of 9,000 discharges have impact: studios were closed and game projects were abruptly canceled.

Closing and Cancellations

Among the closed studios is The Initiative, created to lead the ambitious Reboot of Perfect Dark, in collaboration with Crystal Dynamics. This game was one of the most important projects of the future Xbox portfolio, but its production was interrupted, ending an effort that lasted several years. The closure of The Initiative not only represents the end of the project, but also highlights the structural problems of the division, especially with regard to coordination between internal and external studios.

Rare also lost one of its most promising games: Everwild began as an ambitious promise of Rare, but was eventually canceled after years of unstable development and difficulties in defining his concept.

Impact on studios and teams

In addition to these cases of great visibility, several unanswered projects have also been canceled. One of them was an MMO in production at Zenimax Online Studios, with the name of Blackbird code. Internal sources say this title was in the early stage of production, but was abandoned due to budget cuts. Another important impact falls on Romero Games, the studio founded by John Romero, co -creator of Doom, who lost funding to his new first person shooter. Consequently, the studio’s future is now concerned and the game, which was supported by Xbox, was suspended indefinitely.

Phil Spencer, CEO of Microsoft Gaming, publicly justified decisions, stating that these measures are necessary to harmonize the company’s structure with its strategic objectives. According to Spencer, the focus is on the elimination of hierarchical layers that prevent creative agility and strengthening teams with greater potential for innovation and delivery. Despite the magnitude of the cuts, the executive has ensured that Xbox is still committed to producing new titles and supporting its platform, including the future hardware release.

A worrying pattern

However, reality on the ground reveals a division under enormous pressure. Since 2024, Microsoft had already carried out three previous vacancies that affected the video game sector, totaling more than 2,800 jobs suppressed before this last round. The accumulation of discharges in less than two years launches serious doubts about the sustainability of the company adopted by the company, especially after the acquisition of industry giants such as Activision Blizzard and Bethesda, which meant a substantial increase in the organizational dimension of the Game Division.

The Xbox crisis cannot be seen in isolation. Since 2022, it is estimated that more than 35,000 professionals have been fired from the world video game industry, affecting large publishers and independent studios. In the case of Microsoft, the consequences caused a strong negative reaction in the creator community. Testimonies of workers describe an environment of uncertainty, frustration and demotivation, aggravated by uncommon internal communications and the perception that many projects were sacrificed without notice. A producer who ordered anonymity even described the situation as “a black hole that sucks everything and spits the bones”, alluding to the way the culture of large -scale acquisitions seems to be consuming the creative ecosystem itself.

The future of Xbox

With these changes, Microsoft tries to replace its video game division into a simpler and more functional model. Still, the impacts of this restructuring make questions about Xbox’s ability to maintain a robust creative line-up, especially after the closing of teams and the collapse of various promising projects. The focus is now on maintaining the main releases on the right track and preparing for the next generation of hardware, including the already confirmed successor of Xbox Series X/S.

While Microsoft tries to reposition itself in the sector with a more rationalized strategy, you need to know how the Xbox brand will be able to recover the confidence of its creators, partner studios and the players community. The coming months will be fundamental to see to what extent this internal reformulation will bear fruit, or the beginning of a more controlled and defensive phase will be marked for one of the most emblematic brands of the video game industry.