Xbox Makes Big Cuts (Again)

For the fourth time in 18 months, Microsoft has made significant cuts to its Xbox division, including cutting some unreleased games. Find out which ones and the details below. Also, The Alters apologies for not disclosing its use of AI. All this and more. Let’s go!

AI Alters

The Alters has been a relative success story after releasing last month. However, when fans found out the game was using undisclosed generative AI in images, text, and translations, they were not happy. 

Eurogamer compiled some examples of how the game uses AI with examples posted online by players. The game is available on Steam, and Valve requires any game that uses pre- or live-generated AI to divulge this as part of their distribution agreement. After the article was posted online, creators of the game 11 Bit Studio issued a press release and public apology. From that document:

During production, an AI-generated text for a graphic asset, which was meant as a piece of background texture, was used by one of our graphical designers as a placeholder. This was never intended to be part of the final release. Unfortunately, due to an internal oversight, this single placeholder text was mistakenly left in the game…

Due to extreme time constraints, we chose not to involve our translation partners and had these videos localized using AI to have them ready on launch. It was always our intention to involve our trusted translation agencies after release as part of our localization hotfix, to ensure those texts would be handled with the same care and quality as the rest of the game. That process is now underway, and updated translations are being implemented.

Microsoft’s big cuts

The official announcement came this week that Microsoft would lay off up to 9,000 employees across the company. The cuts for the Xbox division were significant, with multiple games cancelled and studios closed. In a memo sent to employees, Xbox head Phil Spencer explained the action:

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.

Here are some of the cuts they announced:

• The Perfect Dark reboot was cancelled and the developer creating it closed. Xbox previewed the game at an event last year, and developers who worked on the game say what was shown then was “probably more real than you think.”
• The head of ZeniMax is leaving after an unannounced project the studio had been working on was canceled. According to reports from Bloomberg, Phil Spencer was so impressed with a demo of the game in March that Xbox Games Studios head Matt Booty “had to pull the controller from his hands in order to stop him from holding up a meeting.”
• Forza Motorsport developer Turn 10 was hit hard by layoffs, losing nearly 50 percent of their staff.
• Rare Studio canceled their in-development game Everwild and laid off employees. Gregg Mayles, who had directed the Banjo-Kazooie games and worked at Rare for 35 years will also leave the company. 
• Call of Duty studios Raven Software and Sledgehammer Games have seen cuts. Raven is currently working on Call of Duty: Black Ops 7, scheduled to release later this year. 
• Microsoft cut funding for Romero Games’ next project after meeting with them days before. These cuts caused the studio to close. 
• Blizzard’s Warcraft Rumble mobile game will no longer receive new content.

Developers and fans are not happy about the cuts, especially since Microsoft seems to be doing well financially. GameIndustry.biz calls it Microsoft's darkest day in gaming since their last cuts. Arkane Studios founder blames Game Pass, saying it has damaged the industry. 

Microsoft says every game shown in its June showcase is safe for now, but what does that mean for Games like Fable and State of Decay 3? For those who lost their jobs, Microsoft recommends using AI to “help reduce the emotional and cognitive load that comes with job loss.”

Side Quests (more stories worth reading)

🎮 We took a deep dive into four release day games for the Switch 2. 

🚀 BioWare announced that they will shut down the servers for Anthem January 12, 2026, making the game completely unplayable. 

👩🏼‍⚖️ Three former Ubisoft executives were convicted of sexual and psychological harassment.

📉 A new report says video games spending by young Americans is dropping sharply. 

✖️ Helldivers 2 is officially coming to Xbox with crossplay. 

🔫 According to new reports, one of the projects recently canceled by developer People Can Fly was Outriders 2. 

🏀 After the success of their college football game, EA teased a new college basketball game. Not to be outdone, 2K sports said we can do college basketball too. 

🫰🏾 Nintendo plans to raise the price of the original Switch 1 hardware in Canada. 

🏆 The winners for the 2025 Games for Change award were announced, with Indika winning Game of the Year. 

📺 A new season of Cyberpunk Edgerunners is coming to Netflix with a new cast and darker story. 

😕 If you have seen #BoycottTheHatch floating around social media in regards to Roblox and have no idea what it means, IGN breaks it down for you. 

🏆 Board game Flip 7 won the top honor at the Origin Awards.

🎮 Ars asks what’s wrong with AAA games? They say the development of the next Battlefield game has answers.

🤪 MindsEye’s head Leslie Benzies allegedly claimed that the troubles facing his company are the result of “internal and external saboteurs.”

🪦 A former Xbox executive says Microsoft’s console business is dead.

👙 Adult-themed mods at Nexus Mods will soon require age verification for UK and EU users. 

💵 Online video game publication Kotaku was sold by G/O Media to Keleops, who also recently purchased Gizmodo. 

🖥️ Commodore was bought by a YouTuber who is re-assembling key execs and teasing new hardware.

New Releases this week:

Check out our article on 12 New Games to Play in July.

7/10: EA Sports College Football 26 (PlayStation and Xbox)
7/1: Tony Hawk's Pro Skater 3 + 4 (PlayStation, Xbox, Switch and PC.)

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