Xbox's Massive Layoffs Gut Major Studios and Derail Key Projects

Microsoft's sweeping Xbox restructuring, which cut roughly 3,200 jobs, is continuing to send shockwaves across its first-party studios, and the full scale of the damage is only now coming into focus. ZeniMax Online Studios, the team behind The Elder Scrolls Online, has confirmed over 200 layoffs in Maryland, part of a broader 379-person cut across ZeniMax's Maryland workforce. Obsidian Entertainment is losing an estimated 60 to 70 employees, with a WARN notice confirming at least 52 cuts, representing roughly a quarter of the studio's staff. Meanwhile, id Software, the legendary studio behind Doom and Quake, has reportedly been so severely gutted that its ability to operate as a standalone development team is now in question, with newly revealed game concepts killed before they ever had a chance.

The ripple effects are hitting some of Microsoft's most anticipated projects hard. Developers working on The Elder Scrolls 6 have expressed serious concern that the loss of "key" personnel will cause further delays to an RPG that was already years away, with reports citing shattered morale and fears of increased crunch among those who remain. Obsidian, for its part, has reportedly been redirected by Xbox to develop a new Fallout game, a move that comes at the direct cost of a planned sequel to Avowed. Union workers at Bethesda are pushing back against the cuts, announcing rallies for the following week with organizers stating, "The company wants us to accept this as a done deal and quietly disappear. We won't let that happen."

Sources