Sea of Thieves creators face threat amid Xbox layoffs — everything will be decided within days

British studio Rare — the team behind Sea of Thieves, and once upon a time the legendary Banjo-Kazooie and GoldenEye 007 — has found itself at the center of unsettling rumors. According to journalists, the team could get caught up in the coming wave of Xbox layoffs — and if insiders are to be believed, clarity should arrive within days. That said, one caveat right away: even the sources themselves don't agree on Rare's fate.

Let's start with what's solidly confirmed. Microsoft really is preparing a major restructuring of its gaming division: according to journalists, the layoff announcement is expected around July 6, and it could affect more than a thousand people. Xbox head Asha Sharma admitted in an internal message that the company's studio system had "grown too large" and that its balance needs to be reassessed. So the layoff wave itself isn't a rumor but a settled matter; what's still open is exactly who it will hit.

This is where insiders start to disagree. The alarm was raised by the editor-in-chief of one industry outlet, who said that, according to his information, Rare is "on the chopping block," and when someone remarked that the situation sounds grim, he briefly confirmed that yes, it's genuinely bad. But another insider recently claimed the exact opposite: that Rare and Obsidian are specifically NOT on the list of closure candidates. 3D Realms co-founder George Broussard shares a similar view, saying Rare is most likely safe — since Sea of Thieves brings in steady revenue. In other words, the industry has two mutually exclusive rumors on its hands, and only an official statement will show which one is true.

It's also worth understanding that even the phrase "on the chopping block" doesn't mean closure. The studio could be sold off or handed to another publisher, and Xbox has flipped decisions within a single day more than once recently. Fans of the "pirate" game can also breathe a little easier: Sea of Thieves will almost certainly keep going even in the worst-case scenario — Rare has a multi-year roadmap for the project, and paid custom servers are already announced for early 2026. So there's no need to worry about the service itself just yet.

The trouble is that Rare was already going through a rough patch before these new rumors. After the ambitious Everwild was canceled in 2025, the studio went through a restructuring and lost several key leaders. The current anxiety is landing on an already tense backdrop across the whole Xbox "reset" wave — the same one that earlier led Microsoft to walk away from its deal with IO Interactive on Project Fantasy. Only an official word from Microsoft will bring real clarity — and by the looks of it, that shouldn't be long now.

How do you feel about even veteran studios like Rare ending up under threat during corporate "resets"? Would you be sad to see Sea of Thieves' creators go if the rumors turn out to be true? Tell us — which Rare games count as golden classics for you?