Xbox Undergoes Major Changes: A Look at Recent Rumors and Canceled Titles

The past few months have been quite the ride for Xbox. In February, the gaming division experienced a significant shake-up with CEO Phil Spencer and his successor Sarah Bond unexpectedly departing. New CEO Asha Sharma and chief content officer Matt Booty quickly moved to restore confidence in the struggling brand. They scrapped the confusing “This is an Xbox” ad campaign, rolled back the recent 50% price hike on Xbox Game Pass that led to a mass exodus, and confirmed that new high-end hardware, dubbed Project Helix, is on the way. They even decided to rebrand from “Microsoft Gaming” to an all-caps XBOX, aiming for a fresh identity. The excitement peaked with a summer showcase on June 7, where they gave away hundreds of translucent green Series X consoles to fans in attendance.

However, just three days later, the situation took a turn. On June 10, reports surfaced that Sharma was planning significant layoffs starting in July. This was later confirmed in a post on Xbox Wire, which outlined an “Xbox reset” over the next 100 days, citing poor revenue, rising hardware costs, and overexpansion during the pandemic.

While it may take time to fully understand the extent of the changes at Xbox, here’s what we know so far, presented in reverse chronological order for clarity.

On June 30, IO Interactive announced on X that their partnership with an external collaborator on Project Fantasy had ended, which was later confirmed to be Xbox pulling out. IO will continue developing the game but mentioned needing to make “staffing decisions” due to the funding shift, which doesn’t bode well.

Marvel’s iconic vampire character has also faced setbacks. On June 30, it was reported that Microsoft is contemplating shutting down Arkane Studios, known for titles like Dishonored, Deathloop, and Prey. This would also halt development on the upcoming game featuring Marvel’s Blade, which has reportedly been pushed back to late 2027.

On July 29, it was reported that Undead Labs, along with Compulsion Games, Double Fine, and Ninja Theory, is at risk of closure. Undead Labs is currently working on State of Decay 3, which was showcased on June 7 and is expected to release in 2027.

On June 29, various reports indicated that Xbox is planning further changes to Game Pass. Consultant Fernando Rizo mentioned that discussions with third-party studios to add their games to Game Pass have been suspended. He noted that developers negotiating with Xbox felt blindsided, but he believes these deals are merely “on pause” as Xbox reassesses its Game Pass strategy.

Also on June 29, a fan site reported that Activision and Xbox were running ads for the upcoming Modern Warfare 4, clearly stating that the game would “not be on Xbox Game Pass this year.” This was part of the April price changes, and Xbox seems keen to ensure there’s no confusion about this update.

Following the initial reports of layoffs on June 15, it became clearer which studios were under consideration for closure. Shortly after, it was revealed that Sharma intends to focus on releasing new entries in major Xbox franchises, including Bethesda’s Fallout and The Elder Scrolls. The Elder Scrolls 6 was announced back in 2018, but no new footage has been shared since. Meanwhile, despite the success of Amazon’s Fallout adaptation since its 2024 debut, no new game in the series has been announced yet. Expect updates on this front in the coming months.

Microsoft remains committed to Xbox as a console, even as challenges loom.