Xbox Layoffs: Bethesda Reportedly Bracing for Major Studio Cutbacks

Xbox has provided additional information about its most recent wave of layoffs, framing the move as part of a broader company “reset.” Under that plan, five internal studios will no longer sit within Xbox’s corporate structure. Ninja Theory and Undead Labs are being sold off, while Double Fine and Compulsion are effectively being separated into more independent operations.

That still doesn’t describe the full scope of the cuts. CEO Asha Sharma has stated that the company expects roughly 3,000 layoffs across Xbox as well as its studios. Additional reporting suggests that ZeniMax and Bethesda are among the hardest hit groups, with the expectation that they will concentrate more heavily on their biggest, established intellectual properties.

Bethesda Will Reportedly Shift Toward Fallout And The Elder Scrolls, A Concern For Starfield

Reporting indicates that Bethesda and ZeniMax are dealing with some of the largest reductions in this round. Separately, it has been claimed that ZeniMax overall is set to undergo a major restructuring, with a pivot toward its flagship franchises. The list being cited includes Fallout, The Elder Scrolls, Doom, Quake, and Wolfenstein.

One notable absence from that lineup is Starfield. Bethesda has continued to support the space RPG with intermittent updates and downloadable content, but the ongoing effort hasn’t been enough to meaningfully energize the player base or pull in a wave of new fans. With Bethesda seemingly turning its attention toward Fallout and The Elder Scrolls, it now looks like Starfield may have fewer opportunities to reverse its trajectory.

This direction also appears to match earlier chatter. There were already signs that Xbox was frustrated by how long it has taken to reach Fallout 5 and The Elder Scrolls 6. Delivering those sequels sooner would create major release opportunities for Xbox, potentially including high-profile exclusives, which helps explain why leadership would want Bethesda to shift attention away from Starfield.

Still, the situation raises practical questions. Bethesda would be expected to accelerate new work on major projects while operating with a smaller team. The studio isn’t typically known for juggling several large undertakings simultaneously, so it’s hard to see how The Elder Scrolls 6 and Fallout 5 could arrive faster after layoffs reduce headcount.

For now, players can only wait to see how other studios are affected. At the moment, the only clearly confirmed details are the specific studios that are no longer part of Xbox.