Microsoft has embarked on a significant restructuring journey, marked by a series of layoffs across its game studios, a trend that began under the leadership of former Xbox CEO Phil Spencer. The company is now poised to implement further job cuts and studio closures as part of the strategic “Xbox reset” initiated by new CEO Asha Sharma. This long-term cost-cutting initiative has led to the cancellation of numerous game projects, many of which had generated considerable excitement prior to their abrupt termination.
Former Blizzard president Mike Ybarra expressed his enthusiasm for one such project, stating he had invested many hours into it and was “incredibly excited about the team’s vision and the brand-new world it presents for players to immerse themselves in together.” Novelist and Blizzard writer Christie Golden echoed this sentiment, describing the project as “hella beautiful” and expressing her eagerness for its release. However, following Microsoft’s acquisition of Activision Blizzard in 2023, the ambitious game titled Odyssey was ultimately shelved in 2024. Reports indicate that the development faced challenges, including a mandated switch from Unreal Engine to an internal engine originally designed for mobile games, leading to its cancellation before it reached a release-ready state.
Everwild | Cancelled in 2025
Another casualty of the restructuring was Everwild, a project that had been in development for several years. Rare, the studio behind the beloved Sea of Thieves, had envisioned Everwild as a game centered around nurturing animals, a stark contrast to the action-oriented titles dominating the market. Despite its creative potential, the game was reportedly rebooted at least once during its development cycle, raising concerns about its viability. Ultimately, the project was canceled in 2025 amidst a wave of layoffs, leaving many to wonder what could have been.
Perfect Dark | Cancelled in 2025
The 2025 cuts also claimed the highly anticipated reboot of Perfect Dark, a classic first-person shooter developed by Rare. The Initiative, the studio tasked with bringing the franchise back to life, saw its efforts come to an abrupt halt, alongside the cancellation of several unannounced projects. Despite a positive reception to the gameplay reveal, the immersive shooter campaign, which promised sci-fi gadgets and engaging gameplay, was deemed unfeasible in the current market landscape. Reports suggest that Take-Two Interactive expressed interest in acquiring the project but ultimately could not reach an agreement with Microsoft.
Contraband | Cancelled in 2025
Contraband, a collaboration between Microsoft and Avalanche Studios Group, was another project that fell victim to the restructuring. Initially announced in 2021, this co-op smuggling game set in the ’70s had generated intrigue among gamers. However, by 2025, Avalanche confirmed that active development had ceased, leaving the future of Contraband uncertain. While the concept of an open-world co-op crime game from the creators of Just Cause held promise, it appears that the project will not see the light of day under Microsoft’s banner.
Project Blackbird | Cancelled in 2025
Lastly, Project Blackbird, an ambitious MMO developed by ZeniMax Online Studios, was quietly canceled in 2025. The project had been in the works for over six years, with founder Matt Firor expressing deep disappointment over its termination. Despite Phil Spencer’s initial enthusiasm for the game, the financial realities of public companies ultimately dictated its fate. Firor noted that the substantial upfront costs associated with developing an MMO were viewed as a risky investment by Microsoft. Following the cancellation, some members of the Blackbird team formed a new studio named Sackbird, aiming to create games without the constraints of corporate expectations.
