Rare Ltd.
UK studio owned by Microsoft, maker of Sea of Thieves, now a single-game shop.
On the record
Checkpoint: Microsoft FY2026 earnings call, watched for Azure/AI capex commentary and any Xbox studio announcement
The call
Rare's survival now depends less on Sea of Thieves' player numbers and more on where Microsoft decides to spend its money next.
Rare Ltd. makes Sea of Thieves, a multiplayer pirate game played by over 40 million people across Xbox and PlayStation. The game is hard to replace because its crew-based gameplay and player networks create real value that competitors would struggle to copy, and Microsoft's distribution reach gives it built-in advantages. However, Rare's survival depends entirely on whether Microsoft keeps funding it during a major gaming restructuring: the studio lost key leaders in June 2026, cancelled its other game in progress, admitted its money-making model is broken, and now makes only one product at a time when Microsoft is cutting costs across gaming. The one thing that could save it is whether a new paid subscription service launching in early 2026 actually stops players from leaving the game.
Why
01
AI pressure: None apparent. No AI product competes with Sea of Thieves directly, but Microsoft's AI/Azure capex race could pull funding from gaming studios like Rare. Could AI do the core job? Unlikely.
02
Bigger players: Microsoft (parent company, sole capital allocator). Microsoft is cutting ~3,200 Xbox jobs and divesting four studios; a journalist reports Rare 'may be affected' though it wasn't named. Could a giant copy it? Probably.
03
What protects it. Sea of Thieves still pulls in tens of millions of players and steady Steam/PS5 revenue, giving Microsoft a reason to keep funding it.
What would change this call
Microsoft names Rare in a future Xbox restructuring or divestiture announcement. Would show Microsoft is winding down or selling off Rare, not investing.
Custom-server paid subscription tier (launched early 2026) fails to lift Steam concurrents. Would show Rare's content model cannot arrest the player decline.
No second Rare project is greenlit within 12 months of Everwild's cancellation. Would show Microsoft is not committing new resources to the studio.
Custom-server paid subscription tier (launched early 2026) fails to lift Steam concurrents. Would show Rare's content model cannot arrest the player decline.
No second Rare project is greenlit within 12 months of Everwild's cancellation. Would show Microsoft is not committing new resources to the studio.
Key numbers
- Microsoft bought Rare for $375M
- Steam concurrents fell from ~14K to 4K-8K
- Sea of Thieves launched on PS5 in April 2024
Named risks
- Rare could be named in a future Xbox studio divestiture or layoff round after July 2026 restructuring.
- Loss of internal advocates Craig Duncan and Louise O'Connor in June 2026 removes Rare's Xbox-level champions.
- Rare is now a single-product studio after Everwild's July 2025 cancellation, with no diversification.
- Sea of Thieves Steam concurrent decline from 14,000 to 4,000-8,000 signals engagement fatigue despite recent rebound.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Ubisoft (Skull and Bones) | losing to | Skull and Bones commercially disappointing vs Sea of Thieves, reported 2024-02-24 |
| Microsoft (parent, Xbox Game Studios) | contesting | Xbox divested 4 studios and cut 3,200 jobs on 2026-07-06; Rare's fate depends on this internal capital decision |
| Indie pirate entrants (Windrose, unnamed rivals) | gaining on | New pirate-genre indie titles emerging as of 2026-04-20, though unproven vs Sea of Thieves |
Questions people ask
- Is Rare Ltd owned by Microsoft?
- Yes. Microsoft has wholly owned Rare since acquiring it on September 24, 2002 for a reported $375 million. Rare operates inside Xbox Game Studios with no independent listing, funding, or valuation of its own.
- Is Rare at risk of layoffs or closure in 2026?
- Uncertain but flagged. On July 6, 2026 Microsoft announced ~3,200 Xbox job cuts and divested four studios (Compulsion, Double Fine, Ninja Theory, Undead Labs). Rare wasn't named, but journalist Patrick Garratt reported it 'may be affected' in further restructuring.
- What happened to Rare's second game Everwild?
- Everwild, Rare's decade-in-development fantasy IP, was cancelled on July 2, 2025 as part of a 9,100-person Microsoft-wide layoff, leaving Sea of Thieves as Rare's only live product.
- Who is Sea of Thieves' biggest competitor?
- Ubisoft's Skull and Bones was the main direct pirate-genre rival but was widely reported as commercially disappointing versus Sea of Thieves as of February 24, 2024, leaving Rare without a dominant challenger in its niche.
- Is Sea of Thieves losing players?
- Steam average concurrent players fell from about 14,000 in 2022 to roughly 4,000-8,000 through 2025-2026, per SteamCharts data dated June 6, 2026, though January 2026 saw a +16.5% month-over-month rebound to about 6,200.
- Did Rare lose key leadership recently?
- Yes. Craig Duncan, who led Xbox Game Studios after running Rare, and Louise O'Connor, Xbox Chief of Staff and 25-year Rare veteran, both departed Microsoft on June 15, 2026, leaving interim oversight with Xbox CCO Matt Booty.
Timeline
- 2026-07-06Microsoft cuts ~3,200 Xbox jobs, divests 4 studios; Rare rumored possibly affected
- 2026-06-22Sea of Thieves live-action film announced with director Destin Daniel Cretton
- 2026-06-18Sea of Thieves Season 20 'Custom Seas' launches with player-built modes
- 2026-06-15Xbox Game Studios head Craig Duncan and Chief of Staff Louise O'Connor leave Microsoft
- 2026-03-30Rare admits seasonal content cadence for Sea of Thieves 'isn't working'
- 2026-01-01Sea of Thieves launches optional paid custom-server subscription tier
- 2025-10-1435-year Rare veteran Gregg Mayles confirms departure from studio
- 2025-07-02Everwild cancelled amid 9,100-person Microsoft layoff
- 2024-04-01Sea of Thieves launches on PlayStation 5
- 2002-09-24Microsoft acquires Rare for a reported $375 million
Revision history
23 July 2026
First assessed. Losing its protection. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Rare Survived 40 Years and $375M Microsoft Buyout, but a New Rumor Says Its Time May Be Up (2026-07-06)
- How Many People Are Playing Now? (2026-05-31)
- Rare, Performance Metrics & Competitor Intelligence, 2026 (2026-04-15)
- Sea of Thieves: 2025 Edition (2026-06-06)
- Sea of Thieves (2026-07-08)
- Rare Ltd (2026-02-27)
- Rare - Headcount, Funding & Open Jobs (2026-06-20)
- Sources: Everwild has been cancelled as Xbox layoffs hit Rare (2025-07-02)
- Banjo-Kazooie director Gregg Mayles confirms he's left Rare (2025-10-14)
- Personalise Your Pirate Playground in Sea of Thieves Season 20 (2026-06-18)
- Sea of Thieves Community Direct: March 2026 (2026-03-30)
- Microsoft Celebrates Rare's 40th Anniversary...