Microsoft is undergoing a restructuring that includes layoffs across its game studios and further job cuts and studio closures as part of the "Xbox reset" initiated by new CEO Asha Sharma. This initiative has resulted in the cancellation of several game projects, including:
- Odyssey: Shelved in 2024 after challenges in development, including a switch from Unreal Engine to an internal engine.
- Everwild: Canceled in 2025 after years of development and at least one reboot.
- Perfect Dark: The reboot was canceled in 2025 despite a positive gameplay reveal, with reports of interest from Take-Two Interactive.
- Contraband: Development ceased in 2025, leaving the future of the co-op smuggling game uncertain.
- Project Blackbird: Canceled in 2025 after over six years of development due to financial concerns regarding the investment required for an MMO.
Following the cancellation of Project Blackbird, some team members formed a new studio named Sackbird.