Rare (formerly Rareware) was once a studio that prioritized high-quality games. They made revolutionary hits on the N64, including the stealth shooter, Perfect Dark. Microsoft later partnered with start-up studio, The Initiative, to reboot Perfect Dark. Simultaneously, Rare announced their upcoming original IP, Everwilds, where players explore the world as Eternals. On July 2, 2025, Microsoft and Xbox Game Studios cut their productions short.

The Microsoft-Rare Acquisition History

Microsoft saw Rare’s profitable potential increase Nintendo 64 sales during the early Console War. Until Rare produced their fully M-rated platformer, Conker’s Bad Fur Day, Nintendo tried to avoid association by not marketing the game on Nintendo Power. The foul-mouthed red squirrel and the crude humor prevented a worldwide release. Conker’s Bad Fur Day sold 55,000 units in its first month, compared to Perfect Dark’s 2.25 million units and Banjo-Kazooie’s 3.6 million units.

The game tarnished Nintendo’s reputation as a family-friendly seller, and they were willing to sell Rare. Microsoft, with the Xbox challenging Sony’s PS2 in the M-rated game market, purchased the studio on September 24, 2002. The UK game developer was exchanged for $375 million USD.

Since then, gamers have received numerous disappointments from the partnership’s business decisions. One of Rare’s major failures with its current publisher is Project Spark, a sandbox game creator. The game promised to provide an ambitious toolbox with various assets to produce homemade games on the Xbox One. A gameplay trailer was released in October 2014, demonstrating and encouraging creative liberty.

Like Conker’s Bad Fur Day, it was well-received for what it did, but Project Spark did not generate enough interest. This was due to Microsoft including 50 purchasable asset packages while the original download provided limited resources. The results drove away most of the game-making audience. Microsoft and Rare soon closed the game’s servers in 2016.

Perfect Dark and Everwild Gave Hope

2019 and 2020 became Rare’s return to prioritize high-quality games. After releasing their pirate MMO, Sea of Thieves, Rare wanted to focus on bringing a new adventurous experience. At X019, the studio presented Everwild, with viewers mesmerized by soothing environments and animal life. Game executive producer Louise O’Connor and art director Ryan Stevenson later released commentary, explaining what the game is about.

Everwild takes place in a mystical world where the Eternals make symbiotic relationships with animals. Aside from its stunning visuals, there were no hints of gameplay, leaving gamers to speculate. The Eternals linked their senses with the animal by offering a gentle touch to the forehead.

In one frame, a fluffy creature assists the linked Eternal by pulling a tree down for lumber. Stevenson revealed Everwild’s ecosystem has various biomes. The game sounded like it was going to be an adventure survival simulator, and players must learn to adapt to seasonal climates.

Perfect Dark resurfaced during The Game Awards 2020 show. The series’ return trailer showed a drone tracking down Joanna Dark. The following subtitles establish that this new title will be a reboot. “Did you find the answers you were looking for, Agent Dark?” her superior asked. “Not yet,” Joanna responded, “this is just the beginning.” Microsoft entrusted Rare’s IP to The Initiative, a game studio housed by experienced game developers. Crystal Dynamics’ Tomb Raider director Darrell Gallagher happily took on the task.

Since its 2005 prequel, Perfect Dark Zero, left fans unsatisfied with the modernized future concept. Players felt young Joanna Dark’s story was weak compared to her 2000 debut on the N64. As for the gameplay, there was slow movement, input delay, and awkward swapping between camera perspectives.

The Initiative later released a Perfect Dark gameplay presentation at Summer Games Fest 2024. As Joanna, players are tasked to stop the misdeeds of the Carrington Institute. The game featured stealth infiltration, gun combat, tech manipulation, and environmental scanning. The cinematics have also reinvigorated fans into Perfect Dark’s reimagining.

Why Did Microsoft Stop Rare’s Production?

Recently, Windows Central informed that Microsoft will be shutting down The Initiative. The Perfect Dark reboot was intended to be the studio’s first game. Joanna Dark joins Everwild in Rare’s shortcomings, which led to the development shutdown. IGN reported that 9,100 employees were laid off, which is 4% of Microsoft’s workforce.

CEO Phil Spencer sent out an explanation during the commotion. “To position Gaming for enduring success and allow us to follow strategic growth areas, we will end or decrease work in certain areas of the business. We will follow Microsoft’s lead in removing layers of management to increase agility and effectiveness. Out of respect for those impacted [on July 2, 2025], the specified notifications and any organizational shifts will be shared by your team leaders in the coming days.

[…]HR is working directly with the impacted employees to provide severance plan benefits, including pay, healthcare coverage, and job placement resources to support their transitions. Employees whose roles were eliminated are encouraged to explore open positions across Microsoft Gaming, where their applications will be given priority review.”

Spencer’s message conflicted with gamers as they understood Rare’s past mistreatment. An update memo from Xbox Game Studio head Matt Booty was equally rage-inducing. He said, “We have shared the same decision to stop development of Perfect Dark and Everwild as well as wind down several unannounced projects across our portfolio.

[…] These decisions, along with our other changes across our teams, reflect a broader effort to adjust priorities and focus on resources to set up everyone for greater success within a changing industry landscape. […] Our overall portfolio strategy remained unchanged: build games that excite players, continue to grow our biggest franchises, and create new stories, worlds, and characters.”

Microsoft’s words fumed Rare’s followers, for they saw the potential of both Perfect Dark and Everwild. It’s currently unknown if The Initiative will find a new game publisher to keep their studio alive. Both games took almost a decade to bring the creator’s vision to life. For now, Rare continues to take hits from current ownership.