Microsoft's ongoing restructuring under new CEO Asha Sharma has resulted in significant job cuts, studio closures, and a growing list of cancelled game projects. These decisions, described as a "Xbox reset," have brought an end to several ambitious titles that were in various stages of development across its studios.
Among the casualties is Blizzard's survival game, codenamed 'Odyssey.' First revealed in 2022, the project had been in development for nearly five years. Former Blizzard president Mike Ybarra expressed considerable excitement for the game's vision and its original world, with novelist Christie Golden also praising its beauty and potential. Development reportedly began in Unreal Engine but was later mandated to switch to an internal mobile engine, potentially contributing to its struggles. Despite not being close to release, the cancellation in 2024 coincided with Ybarra's departure. The potential of a polished survival game from Blizzard, a genre that has seen recent commercial success with titles like Subnautica 2, was noted.
Rare's 'Everwild,' a game that appeared to focus on nature and cooperation, was also cancelled in 2025. Having undergone at least one reboot during its lengthy development, the game never presented a fully realized vision. While its focus on non-violent interaction and fantastical creatures differed from Rare's previous success with the player-versus-player pirate adventure Sea of Thieves, the initial pitch for that game also defied conventional expectations. The cancellation occurred during one of Microsoft's widespread layoff events.
Another high-profile casualty is the reboot of the classic first-person shooter 'Perfect Dark,' also cancelled in 2025. The development was being handled by The Initiative, one of the studios shut down as part of the cuts. A gameplay reveal had garnered positive reception, and reports suggest Take-Two Interactive even attempted to acquire the game, though a deal did not materialize. The publisher subsequently hired key former leads from the project to establish a new studio.
'Contraband,' a co-op smuggling game set in the 1970s from Avalanche Studios Group, has also ceased active development. Announced in 2021 with a trailer that provided little gameplay information, the collaboration between Microsoft and the Just Cause developer was anticipated as a potential open-world co-op crime experience. Avalanche Studios announced the cessation of active development in 2025, casting doubt on its future, even without Microsoft's involvement.
Finally, ZeniMax Online Studios, known for 'The Elder Scrolls Online,' had been developing a new MMO codenamed 'Project Blackbird' for over six years. Despite reportedly being a favorite of Phil Spencer, the project was cancelled in 2025. ZeniMax Online Studios founder Matt Firor resigned following the cancellation, stating that the game represented a "very large bet" due to its significant upfront development costs, a risk that larger, public companies like Microsoft may be less willing to take in pursuit of predictable revenue growth. Some members of the 'Project Blackbird' team have since formed a new independent studio, Sackbird, to pursue their own projects with greater creative freedom.
The pattern of cancellations suggests a strategic shift for Microsoft, potentially prioritizing fewer, more established franchises and perhaps streamlining development processes. This has led to the loss of potentially innovative and exciting projects, raising questions about whether the cost-cutting measures are truly pragmatic given the company's overall profitability.