Microsoft has spent the past few years laying off thousands of workers from its collection of game studios, which ballooned under former Xbox CEO Phil Spencer. Now it’s set to cut more jobs and close more studios as part of new CEO Asha Sharma’s “Xbox reset.”
That years-long Xbox cost-cutting campaign has led to more game cancellations than we know about, ending huge projects that, at least on the surface, were exciting.
Were these “hard decisions” genuinely the pragmatic ones? The 2020s certainly have been marked by some massive flops, and it’s possible that some of these projects were money pits. A couple of them were especially risky propositions: big, hard-to-make online games.
But as Microsoft doubles down on console exclusives and tries to hurry along heavy-hitters like The Elder Scrolls 6, I’ve got to wonder if it was wise to toss so much in-progress work, some of which was highly praised internally.
It’s the risky games that are the most exciting, and while Gears of War: E-Day looks impressive in ways, it’s not exactly an electrifying proposition this far removed from the 2010s. Given how profitable Microsoft is as a whole—it’s making billions even as it dumps money into AI—was it really pragmatic not to let some of its best cooks cook?
Here are five of the big games Microsoft recently crossed off the upcoming list.
‘Odyssey,’ Blizzard’s survival game | Cancelled in 2024
We first heard that Blizzard was making a survival game in 2022. Codenamed Odyssey, it had been in development for almost five years at that point, and Blizzard devs on and off the project were hyped about it.
Former Blizzard president Mike Ybarra said that he’d “played many hours” of the game and was “incredibly excited about the team’s vision and the brand-new world it presents for players to immerse themselves in together.”
“All I can say is it’s gonna absolutely rock,” said novelist and Blizzard writer Christie Golden. “Hella beautiful too. I cannot wait!”
Microsoft acquired Activision Blizzard in 2023 and cancelled Odyssey in 2024. Ybarra left the company at the same time.
According to a Bloomberg report, development of Odyssey had started in Unreal Engine, but struggled under a mandate to switch to “an internal engine that the company had originally developed for mobile games.” Odyssey was not close to release when it was cancelled, the publication reported.
Maybe it was a classic case of development hell, but a survival game with Blizzard’s polish, storytelling, and art direction sounds like a good idea to me, and unlike some genres, co-op survival hasn’t calcified. Even in a quite unfinished early access state and after lots of corporate drama, Subnautica 2 sold over 4 million copies this year.
Everwild | Cancelled in 2025
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We never got a complete picture of what Everwild was going to be. Rare is best known these days for Sea of Thieves, in which players battle it out on the high seas in search of treasure. Everwild, by contrast, appeared to be a game about being kind to animals.
Everwild had been development for a long time when it was cancelled, and was reportedly rebooted once, which probably didn’t help convince Microsoft that it should continue to fund a game that contained no exploding barrels or grimacing men.
But the pitch for Sea of Thieves probably raised eyebrows, too. A casual game to play with your friends, but it’s PvP and players can grief each other? No progression beyond cosmetics? And you want to spend how much time making the water look awesome?
Rare’s creativity shines in the trailer above: I don’t know what’s going on with the giant amphibian that carries fish (or its young?) around in its mouth, but the vibe is great.
Everwild was cancelled in 2025 during one of Microsoft’s mass layoff waves.
Perfect Dark | Cancelled in 2025
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The 2025 cuts also claimed a reboot of classic Rare first-person shooter Perfect Dark and one of the studios that was making it, The Initiative. (“Several unannounced projects” were also vaporized that day.)
The gameplay video above is the last we saw of the FPS. An immersive sim-ish shooter campaign with sci-fi gadgets is perhaps not a cutting-edge concept in 2026, but you can say the same about Gears of War: E-Day and the Halo campaign remake. Perfect Dark is a beloved classic, and the response to the gameplay reveal was positive.
Take-Two reportedly tried to take the game off of Microsoft’s hands, but couldn’t reach a deal. The GTA publisher clearly believed it had potential, though, because it snatched up the former leads on the game to found a new studio.
Contraband | Cancelled in 2025
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Contraband was a collaboration between Microsoft and Just Cause developer Avalanche Studios Group. It was going to be a co-op smuggling game set in the ’70s, but Avalanche announced in 2025 that active development of the game had ceased. It could theoretically still happen without Microsoft, but it doesn’t seem likely.
We never found out much about Contraband, which was announced in 2021 with the gameplay-less teaser above, but an open world co-op crime game from the Just Cause developer sounds like a good time.
Project Blackbird | Cancelled in 2025
ZeniMax Online Studios, the developer behind Elder Scrolls Online, had quietly been working on a new MMO—codenamed Project Blackbird—for over six years before Microsoft cancelled it alongside the other games it tossed out in 2025. Phil Spencer reportedly liked the game a lot, but that wasn’t enough to save it.
ZeniMax Online Studios founder Matt Firor resigned as a result of the cancellation, and said earlier this year that he’d been waiting his entire career to make a game like Project Blackbird. In a separate interview in April, Firor said that Blackbird would’ve been “fantastic” and that Microsoft missed an opportunity by not following through.
The reason it got the axe, Firor says, is that public companies like predictable, consistent revenue growth, and an MMO with lots of front-loaded development costs represents “a very large bet.”
“It’s just: Big business is big business,” he said. “Microsoft is Microsoft, right? And a giant successful videogame on the Microsoft level was frankly not that stimulating to them.”
Some of the laid-off Blackbird team went on to form a new studio with a wry name, Sackbird, and are now at work on a new project.
“After years in AAA, we wanted the freedom to take smart risks without waiting for a greenlight or chasing quarterly targets,” Sackbird COO David Worley said when the studio was announced. “We’re fully employee-owned and funded, which means we only answer to people who are passionate about games.”
