For nearly a decade, this studio taught players how to split treasure without stabbing a crewmate over the last bottle of grog. Now Rare — the team behind Sea of Thieves — finds itself in a much less playful situation: reportedly on the list of studios that could be hit by the next wave of layoffs sweeping through Microsoft’s gaming division. And this isn’t even the first blow the studio has taken in the past two years.
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Why Rare Is Reportedly at Risk of Layoffs
The information didn’t come from Microsoft itself, but from the industry newsletter EDGE Knowledge, cited by several gaming outlets. EDGE editor-in-chief Patrick Garratt wrote on Bluesky that he’d received word Rare is “under threat,” calling the situation “awful.” The wording is vague, but the context makes it hard to dismiss — this is a division where layoff counts are already measured in the thousands.
Current estimates suggest the new wave of Xbox layoffs could affect more than 1,000 employees. Several sources tie the timing to the start of Microsoft’s new fiscal year on July 1 — July layoffs have practically become an annual ritual for the company. In 2025 alone, the division went through two separate rounds that together affected roughly 15,000 people. This round is expected to be smaller, largely thanks to a voluntary buyout program that around a third of eligible employees chose to take.
Could Rare Actually Be Shut Down?
One thing worth stressing: this is not a confirmed studio closure. Sources note that Xbox leadership’s decisions on individual studios have been shifting rapidly in recent months. A telling example is Obsidian Entertainment — according to journalist Jeff Grubb, the studio was initially slated for closure or sale before those plans were reportedly dropped. So “under threat” isn’t a verdict — it’s a state of uncertainty that could resolve in very different ways.
What’s Already Happened at Rare Before This News
These new rumors land on ground that was already shaky. Rare has been through a rough stretch in recent years:
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development of the ambitious project Everwild was cancelled after the studio had invested heavily in it;
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executive producer Louise O’Connor moved into a Chief of Staff role at Xbox Game Studios before eventually leaving the company entirely;
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studio head Craig Duncan was promoted to lead all of Xbox Game Studios, leaving Rare without its previous captain.
Any one of these events on its own could be chalked up to normal corporate reshuffling. Together, though, they paint a picture of a studio steadily losing key people and major projects — which makes the current layoff rumors feel like a continuation of a pattern rather than an isolated incident.
Will Sea of Thieves Keep Getting Support?
The news here is a bit more reassuring. Sea of Thieves itself isn’t expected to disappear — it’s too visible and valuable an asset to simply shut down. But there’s a catch that matters directly to players: the pace and volume of new content have already slowed noticeably compared to the game’s early years following its 2018 launch. In other words, even without a formal studio closure, the game risks getting fewer resources, fewer seasons, and less frequent major updates.
Sea of Thieves and Rare: Key Facts at a Glance
| Factor | Status as of July 2026 |
|---|---|
| Rare’s studio status | Reportedly at risk of layoffs; no confirmed closure |
| Sea of Thieves’ future | Continued support expected |
| Content release pace | Noticeably slower than in the years right after launch |
| Scale of Xbox layoffs | Estimated at over 1,000 employees |
| Possible start date | July 6, 2026 |
| Source of the information | EDGE Knowledge newsletter, comment by Patrick Garratt |
What This Means for Players Right Now
If you play Sea of Thieves regularly, there’s no need to panic — but it’s also not worth ignoring the trend. The most realistic scenario for the coming months isn’t a server shutdown; it’s a slower content cycle: fewer major events, longer gaps between seasons, and possibly less marketing push. For active captains, this is a good moment to adjust expectations and lean into community events, player-made content, and the story chapters you may have already missed — there’s plenty accumulated over the years of updates.
For the industry as a whole, this story is another data point in a broader pattern: major publishers keep trimming studio headcount even at teams whose products remain commercially healthy. A clearer picture should emerge closer to July 6, when the rumored layoff wave is expected to begin. Until then, any conclusions about Rare’s fate remain speculation — which is exactly why this story is worth following rather than jumping to conclusions about too early.
