Microsoft, in a cost-cutting whirlwind, axed Romero Games’ unannounced first-person shooter and let the entire team go—before anyone even got to see a single screenshot. The layoffs were part of Microsoft’s larger push to streamline its gaming division, with even standout teams and “dream job” developers getting the boot. Seems like no project, or studio, is safe these days—even ones riding high on buzz from hits like Empire of Sin. Curious how this chaos is affecting the industry? Stick around.
Even in the ever-shifting world of video games, few saw this one coming—Microsoft’s latest round of cost-cutting has hit Romero Games harder than a no-scope headshot. In 2025, Microsoft announced global layoffs impacting around 9,000 employees, and the Xbox gaming division was right in the blast radius.
The fallout? Romero Games, the studio co-founded by industry legends John and Brenda Romero, lost funding for a big, unannounced first-person shooter, and the entire team was shown the door.
The move felt sudden, even for a business known for its surprise plot twists. Brenda Romero clarified that this wasn’t about missed deadlines or poor performance; the decision came from way above, out of the studio’s control. Employees described the project as a dream job, and now, that dream’s gone—no save point to reload. This wave of layoffs comes after Microsoft made significant investments in gaming acquisitions, like the $68 billion purchase of Activision Blizzard, in a bid to compete with Sony and Nintendo.]
For a studio that’s dabbled in PC and mobile, and only recently made console waves with Empire of Sin, this FPS was supposed to be their next big play. Instead, it’s game over before the trailer even dropped.
The layoffs weren’t isolated either. Microsoft also pulled the plug on The Initiative, the team behind the Perfect Dark reboot, and canceled other anticipated projects like Everwild and an unannounced MMO.
Why the mass exodus? Microsoft says it’s trimming management layers, aiming for more agility and “enduring success.” CEO Phil Spencer explained that, despite Xbox’s strong business numbers, the company needs to focus on fewer, higher-priority projects. Sounds logical on paper—until you’re the one packing up your desk.
Social media lit up with shock and heartbreak, as long-term Romero Games staff suddenly found themselves looking for new gigs. It’s a rough checkpoint for the industry, especially when even well-performing teams aren’t immune to the axe.
In the end, Microsoft’s cost-cutting spree feels like a brutal speedrun through its creative talent pool. Will this strategy pay off with leaner, meaner games? Or is it just another boss fight for developers hoping for a comeback? Only time—and maybe a patch update—will tell.