Xbox layoffs Impact Forza Motorsport Developer Turn 10
Microsoft has initiated a significant wave of layoffs impacting thousands of employees across its global operations. As part of these sweeping organizational changes, the company’s Xbox division has reportedly been hit hard. Reports from sources familiar with the situation indicate that Turn 10 studios, the acclaimed developer behind the popular Forza Motorsport simulation racing series, has been severely affected by these workforce reductions.
Insiders suggest that over 70 individuals were laid off at Turn 10 Studios. These cuts reportedly impact the “vast majority” of the studio’s workforce. One source indicated that the remaining staff count is now just enough to maintain the currently running Forza Motorsport live service game. Managers at Turn 10 reportedly did not address future project plans during the internal calls announcing the layoffs.
Broader Impact Across Xbox Game Studios
While Turn 10 faces substantial reductions, the layoffs extend far beyond this single studio within the Xbox ecosystem. Several other prominent development teams and previously announced projects are also facing significant consequences, including outright cancellations and studio closures.
According to internal memos and reports, Rare, the veteran studio known for titles like Sea of Thieves and Banjo-Kazooie, has reportedly canceled Everwild. This unique action-adventure title was initially revealed in 2019, captivating many with its distinct art style and mysterious world.
Zenimax Online Studios, developers of the successful Elder Scrolls Online MMORPG, has also reportedly ceased development on a new, unannounced MMORPG project internally codenamed “Blackbird.” This move signals a potential shift in resource allocation within the large online-focused studio.
Perhaps one of the most notable casualties is the new Perfect Dark game. First announced in 2020 and featuring gameplay footage shown during the 2024 Xbox Games Showcase (despite lacking a release window), development on this highly anticipated reboot has reportedly been canceled. Adding to this impact, The Initiative, the first-party studio founded in 2018 specifically to develop the Perfect Dark title, is reportedly being closed down entirely as a direct result of this decision.
Widespread Cuts Affect Activision Blizzard King and Zenimax
The workforce reductions are not limited to the traditionally first-party Xbox Game Studios. Teams acquired as part of Microsoft’s massive Activision Blizzard King deal in 2023 and the earlier Zenimax acquisition in 2021 are also experiencing significant impacts.
King, the mobile gaming giant behind the incredibly successful Candy Crush Saga, is reportedly reducing its staff by approximately 10 percent. This translates to around 200 job losses within the mobile division.
Raven Software, a studio known for its work on the Call of Duty franchise and part of the Activision Blizzard portfolio, has also reportedly been affected by the layoffs. Zenimax, which encompasses studios like Bethesda and id Software, saw layoffs beyond the cancellation at Zenimax Online.
Microsoft Gaming CEO Phil Spencer addressed the layoffs in an internal communication. He framed the actions as necessary “To position Gaming for enduring success.” According to Spencer, this involves strategically ending or decreasing work in “certain areas of the business” and aligning with Microsoft’s broader strategy of “removing layers of management to increase agility and effectiveness.”
Similarly, Xbox president of game content and studios Matt Booty issued a memo detailing the impact on the studios. He stated the decisions reflect “a broader effort to adjust priorities and focus resources.” Booty emphasized these choices set up teams for “greater success within a changing industry landscape,” while reiterating that the overall portfolio strategy remains focused on building exciting games, growing major franchises, and creating new IP. He noted that “more than 40 projects” remain in active development with a “strong lineup planned for 2026.”
Historical Context and Strategic Shifts
This round of layoffs represents a continuation of significant workforce reductions within Microsoft Gaming over the past 18 months. It marks the fourth major instance of job cuts specifically impacting the Xbox division during this period.
Previous cuts included nearly 2,000 gaming jobs eliminated in January 2024, alongside the highly publicized closure of Arkane Austin (developers of Redfall), Tango Gameworks (developers of Hi-Fi Rush), and Alpha Dog Games in May 2024. These actions were previously described as part of a “reprioritization of titles and resources.”
The current layoffs are seen by some analysts as further steps in integrating Activision Blizzard King into Microsoft’s structure and streamlining operations following the nearly $69 billion acquisition. Despite reporting strong financial performance in 2024, with revenue exceeding $245 billion (a 16% increase), Microsoft is framing these cuts as necessary cost-saving measures and organizational adjustments vital for navigating a dynamic market and ensuring future profitability and growth in specific strategic areas.
An official Xbox spokesperson confirmed the layoffs impacted less than 4 percent of Microsoft’s total global workforce of approximately 228,000, putting the number affected across the entire company at over 9,100. The spokesperson stated the gaming division was impacted but did not constitute the majority of the total company-wide cuts.
While significant projects are canceled and studios impacted, reports suggest that all games featured during the most recent Xbox Games Showcase event are still planned for release. However, the scale of the Turn 10 cuts raises questions about the future trajectory of the Forza Motorsport series beyond its current live service phase and potential impacts on its development pace or future iterations. The cancellations also remove key anticipated titles from Xbox’s future lineup, relying more heavily on the remaining confirmed projects and upcoming announcements.
Frequently Asked Questions
Why is Microsoft implementing widespread layoffs despite recent financial success?
Microsoft leadership, including CEO Phil Spencer, states the layoffs are strategic moves necessary “To position Gaming for enduring success” in a dynamic market. While Microsoft reported strong revenue in 2024, these cuts are framed as cost-cutting, removing management layers for efficiency, and focusing resources on specific “strategic growth areas” by ending or decreasing work in other areas. This marks the fourth round of Xbox-specific cuts in 18 months, suggesting an ongoing process of restructuring and integration, particularly following large acquisitions like Activision Blizzard King.
Which specific Xbox studios and game projects were most affected by these cuts?
The layoffs severely impacted several studios. Turn 10 Studios, developer of Forza Motorsport, reportedly saw over 70 staff members laid off, affecting a “vast majority” of the team. Several games were canceled: Perfect Dark (developed by The Initiative), Everwild (developed by Rare), and an unannounced MMORPG codenamed “Blackbird” (from Zenimax Online Studios). The Initiative studio, specifically created for Perfect Dark, is also reportedly being closed down entirely. Other impacted studios include King (losing ~10% of staff) and Raven Software.
What do these layoffs mean for the future of Forza Motorsport and other Xbox games?
Forza Motorsport’s developer, Turn 10, reportedly has just enough staff remaining to keep the current live service game operational. This raises questions about the scale and timeline of future content updates or entirely new installments in the series. While some projects were canceled, Xbox president Matt Booty indicated the overall strategy remains focused on building games, growing franchises, and creating new IP. He stated over 40 projects are still in active development, with a strong lineup planned through 2026, and games shown at the last Xbox Games Showcase are reportedly still on track. However, the significant cuts across multiple studios undeniably reshape Xbox’s development landscape and future release slate.
Conclusion
Microsoft’s latest wave of layoffs has dealt a significant blow to its Xbox division, deeply impacting developers like Turn 10 Studios and resulting in the cancellation of anticipated titles such as Perfect Dark and Everwild. While framed as strategic adjustments for long-term success and agility, these widespread cuts reflect a challenging period for the gaming industry and an ongoing restructuring within Microsoft following major acquisitions. The reductions affect teams across the globe, from the core Forza Motorsport team to mobile giant King and developers within the Zenimax and Activision Blizzard portfolios. The future pace of development for key franchises and the composition of Xbox’s studio landscape have clearly been altered by these significant workforce changes.
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