Xbox's July 6 restructuring is expected to cut more than 1,000 jobs across its first-party studios, and conflicting insider reports have put Rare, the 41-year-old British studio behind Sea of Thieves, at the center of the uncertainty.
EDGE's Knowledge newsletter reported that Rare could be "affected" by the cuts. Patrick Garratt, editor-in-chief of the outlet, then posted on Bluesky that he was "told last night that Rare's on the block." When someone called the situation grim, he replied: "It's all horrible, yeah."
But other sources tell a different story. A separate insider claimed Rare and Obsidian Entertainment are specifically NOT on the closure list.
3D Realms co-founder George Broussard shares that view, arguing Rare is likely safe because Sea of Thieves generates steady recurring revenue. The industry is sitting on two mutually exclusive rumors, and only Microsoft can settle which one is right.
What's confirmed: Microsoft is preparing a major restructuring of Xbox. Head of Xbox Asha Sharma told staff in an internal memo that the studio system had "grown too large" and needs to be reassessed. The layoff announcement is expected around July 6, with reports saying it could affect more than 1,000 employees across Xbox's portfolio.
The uncertainty comes after Xbox already shut three studios, Ninja Theory, Double Fine, and Compulsion Games, earlier this year. All three were reportedly negotiating to buy their independence.
Microsoft posted $217.4 billion in profits in its most recent financial year. Even "on the block" doesn't necessarily mean closure. Rare could be sold off or handed to another publisher.
Xbox has flipped major decisions within a single day more than once recently. Giant Bomb's Jeff Grubb noted that Obsidian was reportedly slated for shutdown or sale at one point before leadership reversed course.
Rare was already in a fragile state before these rumors. The studio canceled its ambitious project Everwild in 2025, went through a restructuring, and lost key leaders including studio head Craig Duncan (who had moved up to lead Xbox Game Studios) and executive producer Louise O'Connor.
Sea of Thieves players can take some comfort: Rare has a multi-year roadmap for the game, and paid custom servers were announced for early 2026. The live service will likely continue regardless of what happens to the studio itself.
Clarity should arrive within days. The July 6 deadline for the layoff announcement means Microsoft's official word is imminent.
