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Update #2 []: VGC is now reporting that Banjo-Kazooie director and Donkey Kong Country designer Gregg Mayles has left Rare after over 35 years at the company.

It's a huge blow to the Microsoft-owned studio, and is thought to have left after the cancellation of Everwild. Louise O’Connor, executive producer and art designer who worked on Conker's Bad Fur Day and Banjo-Kazooie: Nuts & Bolts, has also left, according to sources who have spoken to VGC.

Wil Overton, video game magazine artist and long-time Rare collaborator, was also working on Everwild, and is currently seeking work following the game's cancellation.

Update #1 []: As the West Coast begins to wake up, more and more layoffs are being confirmed at Microsoft, including the cancellation of the Perfect Dark reboot and subsequent closure of its developer The Initiative, Windows Central has confirmed (via Pure Xbox).

Perfect Dark was announced back in 2020 but went radio silent until Summer Game Fest 2024. It wasn't present during Microsoft's big conference this year, causing some to worry. The Initiative was developing this revival in partnership with Crystal Dynamics. The game was due to be a revival of the series, which started life on the N64.

Alongside Perfect Dark and Rare's Everwild, ZeniMax Online's unreleased MMORPG, codenamed Blackbird, has also been cancelled. And subsidiaries such as Raven (Call of Duty) and Turn 10 (Forza Motorsport) have also been hit with layoffs.

Original Story: Microsoft has begun informing staff of a huge second wave of job cuts this year, and the layoffs are expected to hit over 9,000 employees.

In a report published by Bloomberg's Jason Schreier, studios affected include King — the team behind Candy Crush — where around 200 staff (roughly 10%) are being laid off, and ZeniMax Media, the parent company of Bethesda. Staff have informed Schreier they weren't authorised to speak to the press.

Other US-based studios will be told of the cuts later today, and the cuts go beyond the gaming division. Many who are losing their jobs today only found out about the incoming cuts due to a previous Bloomberg report. These layoffs follow the 2,000 cuts made in January 2024, and the closure of Tango Gameworks and Arkane Austin in May 2024.

It's galling stuff, and it comes despite the fact that, according to CNBC, " $26 billion in net income on $70 billion in revenue for the March quarter". As a result, it's reportedly one of the most profitable companies in the S&P 500 index.

IGN also reports that Microsoft Gaming head Phil Spencer has been vague on the details, telling staff in a memo that organisational shifts and changes "will be shared by your team leaders in the coming days".

Below is Spencer's note in full, sent to staff and shared by IGN earlier today:

Today we are sharing decisions that will impact colleagues across our organization. To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted today, the specifics of today’s notifications and any organizational shifts will be shared by your team leaders in the coming days.

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we’re seeing currently is based on tough decisions we’ve made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come.

Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted. These decisions are not a reflection of the talent, creativity, and dedication of the people involved. Our momentum is not accidental—it is the result of years of dedicated effort from our teams.

HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.

Thank you to everyone who has shaped our culture, our products, and our community. We will move forward with deep appreciation and respect for all who have contributed to this journey.

—Phil

Rare may also be part of the layoffs as the studio's upcoming action game Everwild — which was bound for Xbox and PC — has reportedly been cancelled as part of the cuts.

We'll update this article as and when more information comes to light.

[source bloomberg.com, via ign.com, cnbc.com]