The Fallout of Microsoft’s 9,000 Layoffs: Who Was Affected?
Published On: July 3, 2025
Microsoft has confirmed it’s cutting around 9,000 jobs—roughly 4% of its workforce—in its biggest round of layoffs since 2023. While the company says these are part of “organizational changes” to stay competitive, the impact has been especially harsh on its gaming division.
Entire studios are closing. Long-anticipated titles are being canceled. And for gamers and developers alike, the fallout is already being felt.
Major games canceled and studios hit hard
Warcraft Rumble: Over at Blizzard, most of the team behind Warcraft Rumble was laid off. The game launched just months ago, but Blizzard has already confirmed there won’t be any new content updates going forward. Instead, they’ll keep the game running with bug fixes and minor patches; basically putting it in maintenance mode.
Call of Duty studios: Sledgehammer Games, Raven Software, and High Moon Studios, three major contributors to recent Call of Duty games, were all affected by layoffs. While Microsoft hasn’t shared specific numbers, multiple employees confirmed departures on social media.
ZeniMax Online Studios: Best known for The Elder Scrolls Online, ZeniMax was working on a new MMO codenamed Blackbird. That project is now canceled due to the layoffs. To make matters worse, studio head Matt Firor is stepping down after leading the team for nearly two decades.
Perfect Dark: The Initiative, the studio in charge of the highly anticipated Perfect Dark reboot, has been shut down completely. The game is no longer in development, despite years of work and early teasers.
Everwild: Rare officially pulled the plug on Everwild, a colorful, mysterious action-adventure game that had been in development since 2019. The studio didn’t give many details, but sources say development faced ongoing challenges.
Forza Motorsport: Turn 10 Studios, the team behind the Forza Motorsport series, was reportedly one of the hardest hit. Bloomberg’s Jason Schreier reported that about half the studio’s staff were let go.
Why is Microsoft doing this?
Microsoft didn’t get into specifics, but the timing says a lot. The company is heavily investing in artificial intelligence, with CEO Satya Nadella noting earlier this year that 20–30% of Microsoft’s code is now generated by AI. They’re also building new data centers and AI infrastructure, costing billions.
Cutting jobs may be part of offsetting those costs. Microsoft also mentioned they’re reducing layers of management and trying to make teams more productive using new technologies. Even though Microsoft posted $25.8 billion in profit last quarter, they’re trimming staff to keep growth going and investors happy.
What this means for gamers and workers
If you’re a gamer, this means fewer original titles and longer waits for new releases. Perfect Dark and Everwild had real potential, but they were shut down before they even got a chance.
We might have already seen the results of these changes before they were announced. The recent World of Warcraft in-game cinematic featuring Faerin Lothar was called out across the internet for looking rushed and low-effort. It was a big drop from the stunning, emotional cinematics Blizzard is known for. Some players think AI was involved or that Blizzard cut costs and hoped no one would notice.
Blizzard also put out a nearly one-hour “short story” video on YouTube, centered on a forgettable character who only briefly appears in The War Within. It wasn’t a proper cinematic. The video just showed different in-game zones while the character narrated a generic backstory that didn’t connect with most players.
If you work in tech, especially in game development, marketing, or creative roles, this is another clear sign of where things are going. Companies are relying more on automation and cutting real jobs, even while profits stay high. AI might be making development faster, but the human touch that made these games stand out is starting to disappear.