Update 7/2: Game Developer has confirmed the closure of The Initiative. According to an email sent to employees by Matt Booty, head of Xbox Game Studios, the studio is being shut down to "adjust priorities and focus resources to set up our teams for greater success within a changing industry landscape."
This email matches the one shared by Windows Central.
Our original story continues below:
It appears that has confirmed that Microsoft is shutting down The Initiative, the Santa Monica-based studio tasked with reviving the Perfect Dark series in 2018.
The closure is taking place in the midst of mass layoffs at Xbox and across Microsoft. The multinational conglomerate announced today it is laying off four percent of its workforce. According to Windows Central, the studio is being shuttered following the cancellation of the Perfect Dark reboot. This also will result in the cancellation of its development partnership with Embracer-owned game studio Crystal Dynamics.
Development on the reboot has been reportedly turbulent as a result of clashes between developers and lack of clear vision from studio leadership. As of 2025, the game would have been in development for 7 years (IGN reported that the game was effectively rebooted in 2022, and was years away from release).
Related:Kim Swift, former Portal lead developer, joins NEARstudios as COO
This joins other reports circulating today that Microsoft is cancelling other games and laying off their development teams. According to Bloomberg games reporter Jason Schreier, Microsoft has canceled a long-in-development online role-playing game at Zenimax Online Studios. Meanwhile VGC reports that Rare's Everwild has also been dealt the same fate.
All three games share the same unfortunate trait of having been in development for well over five years.
Game Developer has reached out to Microsoft for comment and will update this story when a response is issued.
Update 7/2: Microsoft has declined to comment on any specific studio closures following our request for comment. "We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace," the spokesperson said, before pointing us to a copy of Booty's email obtained by Variety.