Microsoft is laying off 18,000 employees over the next year. While the majority of these layoffs (12,500) come from its recently acquired Nokia Devices and Services division, nearly the entire staff of 200 in the Xbox Entertainment Studios division will be losing their jobs in the coming months.

The head of Xbox Originals, Nancy Tellem, told me back in May in New York City that Gears of War was among the games the Entertainment Division was focusing on to find potential episodic opportunities for live action.

“We’re looking at all of the IP that Microsoft owns like Halo, Age of Empires, State of Decay, Fable, Forza and Gears of War,” said Tellem. “We’re in early stage discussions with these six properties, just thinking about development. It’s a long process. The worst thing in the world would be to disappoint fans of the game by coming out with something that didn’t enhance or grow the brand. These are all areas where we’re meeting with the game studios to understand their objectives and meeting with Hollywood talent that in many cases play the games and love these worlds.”

Insider coverage: Gears of War

  • Epic sells its “Gears” franchise to Microsoft
  • Why did Epic sell “gears” franchise?
  • Epic was working to take “Gears” to big screen

Epic archive: Check out more than a decade of Epic Games stories as reported in WRAL TechWire.]

Although never officially announced, Xbox Originals would have been the perfect outlet for expanding the Gears of War franchise into live action entertainment through a digital series, TV series or even a film.

Microsoft’s 343 Studios has had success with Halo: Forward Unto Dawn on the live action front. That series debuted online and was later released as a Blu-ray. 343 and Xbox Entertainment Studios is currently working on a follow-up, Halo Nightfire, which will debut this fall and be part of the Halo: The Complete Master Chief Collection game.

Before Epic Games sold the Gears IP to Microsoft, the local developer had been working with Legendary Pictures to turn Gears of War into a big budget action movie. Multiple screenwriters and directors were attached to the project, but ultimately the film ended up in “development hell” and the rights now lie with Microsoft.

Microsoft will have several panels at San Diego Comic Con this week, including one focusing on the Xbox Originals documentary, Atari: Game Over. That doc is part of a series, Signal to Noise, which will continue production. Also continuing is the Steven Spielberg-produced Halo live action TV series.

Tellem and several key members of the production staff will stay on board in Santa Monica to oversee projects still in development. But many of the concepts and experiments Tellem talked about in New York City will never see the light of day as original video is not a major focus for new Microsoft CEO Satya Nadella focuses more on gaming, the cloud, mobile and other profitable business ventures.

The new Gears of War game in development at Black Tusk Studios in Vancouver, British Columbia.

Former Epic Games Director of Production Rod Fergusson is now a partner and studio manager at Black Tusk. Microsoft did not reference the new Gears of War game at E3 in Los Angeles last month. The company has only confirmed a new game is in development.