Why Xbox's Project Blackbird Cancellation Led to a Studio Founder's Departure

Matt Firor resigned because Microsoft canceled "the game I had waited my entire career to create." After 18 years leading ZeniMax Online Studios, his departure was no planned exit—it was a direct consequence of the axing of the ambitious, unannounced sci-fi MMORPG, Project Blackbird. Its termination, part of Microsoft's sweeping 2025 restructuring, did more than shutter a promising title. It severed an 18-year leadership tenure and scattered a veteran team, offering a stark case study in the human and creative costs of post-acquisition consolidation.

The Dream Project: What Was Project Blackbird?

Project Blackbird was not a fleeting concept. Since 2018, a team within ZeniMax Online Studios had been diligently crafting this new sci-fi MMORPG IP, a significant departure from the studio's flagship fantasy world of The Elder Scrolls Online. For Firor, a veteran of Mythic Entertainment and the architect of ZeniMax Online since its 2007 founding, this project represented a career-defining passion.

By mid-2025, the project had reportedly been progressing well. Sources indicated it was on the cusp of a major milestone: entering full production. Approval had been granted to scale the team, a sign of internal confidence in its trajectory. For ZeniMax Online Studios, Blackbird was the key to a future beyond Tamriel. It represented a chance to prove the studio's creative mettle with an original universe, diversifying its portfolio and securing its next decade. Its cancellation, therefore, wasn't just the end of a game; it was the abrupt closure of the studio's primary path to growth and evolution.

The Corporate Axe Falls: Microsoft's 2025 Restructuring

The plug was pulled in the summer of 2025, contextualized within a much larger, grim corporate picture. Microsoft initiated a significant restructuring of its gaming division, a move that led to layoffs for approximately 9,000 employees across its studios. Project Blackbird became a casualty of this strategic cost-cutting.

The decision carried a palpable strategic dissonance. Microsoft had acquired ZeniMax Media, the parent company of ZeniMax Online Studios, in 2021 for $7.5 billion. The acquisition was framed as a bolstering of Xbox's first-party content. Yet, just a few years later, a nearly-greenlit, ambitious project from that very acquisition was deemed expendable. The immediate human impact was severe and total: the entire Project Blackbird development team was laid off. A project years in the making, and the careers built around it, were dissolved in a corporate instant.

Aftermath and Exodus: From Corporate Layoffs to Independent Startups

From this dissolution, a new entity emerged, embodying the resilient spirit of game development. A group of affected developers from the Blackbird team banded together to found Sackbird Studios, an independent venture whose name is a clear nod to the project that brought them together. This creative phoenix rising from the ashes is a common, yet poignant, industry response to studio closures and cancellations, reflecting a broader pattern where dispersed talent regroups to pursue creative independence—a phenomenon seen in studios like Something Wicked Games, founded by former Bethesda and Bungie veterans.

Matt Firor's relationship with this new venture is one of support, not leadership. He has clarified he is not heading Sackbird Studios. Instead, he is informally advising some of its members and has made minor financial investments in it and other startups. His personal stance marks a significant career pivot. After his resignation, Firor stated he has "not seriously contemplated starting a new development studio." For a founder who shepherded a studio from inception through a massive acquisition and the launch of a flagship MMORPG, this signals a profound shift, likely fueled by the disappointment of seeing his career-defining project terminated.

The Legacy and What Remains: ZeniMax Online's New Chapter

ZeniMax Online Studios continues to operate under new leadership. Joseph Burba, a 13-year veteran of the studio, has taken the reins. The studio's core, public-facing duty remains unchanged: the ongoing support, development, and expansion of The Elder Scrolls Online, which continues to maintain a healthy and dedicated player base.

However, Firor's departure and Blackbird's cancellation leave a strategic vacuum. The central, unresolved question is: what is the long-term vision for ZeniMax Online Studios under Xbox now? With its major new project scrapped and its founder departed, the studio's purpose beyond maintaining ESO is unclear. Is it destined to be a single-IP support studio, or will Microsoft greenlight a new, original project? The cancellation of a nearly-production-ready game raises concerns about the appetite for risk and original IP within the consolidated Xbox Game Studios portfolio.

The cascade effect here is clear and impactful. A corporate restructuring decision to cancel Project Blackbird led directly to the loss of veteran, foundational leadership in Matt Firor. It dispersed a talented team, some of whom regrouped independently in Sackbird Studios. This episode crystallizes a recurring and tense dynamic in the modern gaming industry: the clash between long-term creative ambition and the short-term financial and strategic recalibrations that often follow major acquisitions. As consolidation continues to reshape the landscape, the fate of Project Blackbird and Matt Firor stands as a stark warning: in the pursuit of synergy and scale, the very creative ambitions that make acquisitions valuable are often the first casualties.

Tags: Microsoft Acquisition, ZeniMax Online Studios, Project Blackbird, MMORPG, Gaming Industry Layoffs