Xbox Layoffs Shake Bethesda, id, and More—What It Means for Upcoming RPGs

Microsoft’s Xbox layoffs this week have struck Bethesda Game Studios and several Bethesda-adjacent teams, raising fresh worries about what happens next for major RPG and shooter projects—especially where development timelines and staffing stability are concerned.

Key takeaways

• Bethesda Game Studios, id Software, and ZeniMax Online Studios were among the units impacted by the Xbox restructuring.
• A Maryland WARN Act filing lists 213 layoffs tied to ZOS’s Cockeysville, Maryland office and 166 at ZeniMax Media Inc. in Rockville, Maryland, plus additional cuts in Texas and remote roles.
• Xbox leadership has said the company will coordinate studios more closely around major franchises like Halo, Minecraft, Candy Crush, Fallout, and The Elder Scrolls.
• Bethesda staff have expressed concerns that The Elder Scrolls 6 could face delays or more crunch, even though development is reportedly still continuing.
• Multiple Fallout projects are described as being in motion, including a new Obsidian-led entry, Fallout 5 in discussion, and ongoing work on Fallout 76.

WARN Act details and what the layoffs could mean

Public documentation connected to the layoffs includes a Maryland WARN Act notice showing 213 employees laid off from ZOS’s office in Cockeysville, Maryland, and 166 layoffs from ZeniMax Media Inc. in Rockville, Maryland—379 total across those sites.

In addition, 96 roles based at id Software’s Texas office in Richardson were cut, alongside 40 remote positions. Pinning down exactly which specific tasks were handled by the affected workers is difficult, since Bethesda-related teams can be interwoven across different offices.

Even so, the WARN numbers paint a clear picture of how disruptive the changes are likely to be for the people involved.

Xbox’s restructure plan: more collaboration, franchise-first focus

The broader Xbox restructure follows Monday’s job cuts of 1,600 roles, with another 1,600 expected over the next 12 months. The internal shift has turned the spotlight onto not only the studios Microsoft holds, but also how that studio lineup translates into game quality and delivery.

Xbox CEO Asha Sharma’s approach is centered on increasing collaboration across studios, with emphasis on major recurring franchises—Halo, Minecraft, Candy Crush, Fallout, and The Elder Scrolls. In an email to Bethesda staff sent after Sharma’s memo, Bethesda boss Jill Braff described the layoffs and strategic adjustment as a way to respond to the realities of the industry while keeping Bethesda on a more stable footing.

Braff also framed the change as a need to “change course,” strengthen the business, return to sustainable growth, and keep funding franchises and the players who support them. She acknowledged that the day’s events are still difficult for everyone affected.

When asked what that course correction means in practice for Bethesda, Braff said the company is moving away from a planning approach that mostly tracks what each standalone studio is doing next. Instead, Bethesda will prioritize its biggest franchises and build a content roadmap designed to serve players and the company as a whole.

From there, Braff said Bethesda would align the right people, tools, and resources across the organization to deliver on the chosen priorities.

For remaining teams, the anxiety doesn’t end with this round. Microsoft still has more than 1,000 Xbox-related roles slated for cuts before the end of the company’s financial year, leaving many staff wondering whether further reductions are coming.

The Elder Scrolls 6 — what staff fear, and what continues

This week’s reporting highlighted worries from Bethesda Game Studios workers that the layoffs could have a “substantial and cascading effect” on The Elder Scrolls 6. Morale reportedly took a hit, and there were fears that crunch could return as teams scramble to cover gaps.

The Elder Scrolls 6 is said to be at least two years away from release, despite being announced in 2018, and there’s concern it could slip further.

“Cheaper labor” fears and the risk of more delays

Bethesda developers described a fear that the studio could be replaced by lower-cost contracted work, or that new hires would need onboarding time because Bethesda’s internal tools are proprietary and not familiar to outside developers. In that scenario, the concern is that delays would pile up—potentially requiring crunch to catch up.

Other staff echoed that they were already excited for TES 6, and that the current situation has hit morale hard. They also said Bethesda had been running a tight operation already and that they worry about postponements, noting that no definitive release date was selected as far as they knew.

Meanwhile, Bethesda’s union, OneBGS, plans to march outside the studio’s four offices—Rockville, Austin, Dallas, and Montreal—on July 15. In a message shared with reporters, the union claimed 35 positions at BGS were cut in the United States, with at least 12 additional roles eliminated in Montreal, Canada.

The union alleges that Microsoft and BGS are trying to describe the cuts as an “entrepreneurial change in the scope of business,” claiming the shift is from a “studio-based business model” to a “franchise-based model” to avoid bargaining obligations. The union rejected that framing, arguing that changing wording on slides doesn’t remove workers’ legal right to weigh in on working conditions.

Development reportedly continues, but timing remains uncertain

Even with union pressure and ongoing uncertainty, work on The Elder Scrolls 6 is said to continue. A source familiar with the restructure said the team remains confident in BGS’s ability to keep developing TES 6 and insisted the studio’s plans and ambitions for the highly anticipated RPG remain the same despite the layoffs.

Of course, development can shift dramatically in real time, so it’s not possible to know whether the game will ultimately slip—internally or publicly. Still, the current claim is that TES 6 is on track, even if “on track” still places it about two years from release.

Fallout 5, Fallout 76, Fallout Shelter, and an Obsidian Fallout project

Bloomberg has reported that Obsidian Entertainment—developer of Fallout: New Vegas—has started work on a new Fallout title after being hit by the Xbox layoffs. Bethesda is also said to be supporting Obsidian’s development, which is being read as a clear intent: Sharma wants Bethesda to move faster on Fallout.

A separate source familiar with the plans told IGN that multiple Fallout projects are in development across Bethesda and its partners, including Fallout 5. While Fallout 5 may feel premature, Bethesda development head Todd Howard has previously spoken about it arriving after The Elder Scrolls 6 and confirmed it would consider events established in the Fallout television series. The stated goal is for Fallout 5 to release eventually.

The “live” Fallout project is Fallout 76. IGN reports that it remains a major operation, and that there have been no changes to the team’s plans at the time of reporting. One source claims Fallout 76 still has hundreds of developers, and that the multiplayer game continues to have millions of players.

Fallout Shelter is also still active, and Amazon’s Fallout TV show is continuing as well, with Season 3 now in production. Additionally, a Fallout 3 remaster is described as an open secret.

Sharma’s push for collaboration across Xbox studios on major franchises applies to Fallout, and the Obsidian Fallout project is part of that picture. The bigger question remains how quickly these new Fallout efforts can be completed and shipped.

Concerns around The Elder Scrolls Online’s roadmap

One title that appears to have been directly impacted is The Elder Scrolls Online, with its development roadmap reportedly forced to change because of the layoffs. It isn’t clear how many people working specifically on ESO were cut, but there’s credible concern about what happens to the remaining team and, by extension, what happens to the game itself.

A source familiar with the situation said ZOS is supporting ESO’s new season model while also seeking tighter collaboration with BGS to help support the broader Elder Scrolls franchise—something that sounds, per the report, like assistance in getting The Elder Scrolls 6 over the finish line.

What next for Starfield?

After the Xbox layoffs were announced, fans quickly pointed out that Starfield wasn’t mentioned as part of Bethesda’s priority set. The game didn’t fully meet expectations when it launched in 2023, and subsequent updates and expansions haven’t reportedly moved the needle in a major way.

That said, some longtime supporters had hoped the title would receive more expansions, or even eventually a sequel, establishing Starfield as Bethesda’s third major franchise. IGN reports that there are no changes to the existing Starfield roadmap, and that the team is still working on updates and content. What that will translate into specifically remains unclear.

Separately, a Nintendo Switch 2 version is reportedly in development.

Hope for Arkane and Marvel’s Blade

Microsoft said management at Arkane Lyon began consultations with the Works Council in France to “review potential strategic options.” Le Syndicat des Travailleureuses du Jeu Vidéo (STJV), described as a French non-representative independent workers’ union, told IGN it was waiting for an internal meeting between leadership and worker representatives to learn more.

For Arkane Lyon—best known for Deathloop—the situation could drag out for a while, leaving employees in a waiting period as they look for clarity on their future. Still, the hope is that the studio eventually finds a buyer, similar to how Ninja Theory and Undead Labs were able to survive after layoffs, and that Blade will still reach players.

IGN also reports that before this week’s layoffs, Blade was expected to be revealed early next year, with a release window targeted for Q4 2027. IGN requested comment from Marvel Games but had not received a response at the time of reporting.

id Software says it’s ready to build again

id Software—developer of Doom—issued a statement addressing the layoffs. In it, the studio said it is now staffed at a level comparable to what it had when it released the 2016 Doom reboot. id Software also stated it believes it can still make “great games,” pushing back on the idea that there’s essentially nobody left at the company working on id Tech, the engine id Software and fellow Bethesda-owned studio MachineGames use.

Xbox confirmed to IGN that “there are dozens of people working on id Tech across multiple locations,” and said earlier claims that only one person remained in Texas were “inaccurate.”

The statement from id Software was posted to its X / Twitter account, and IGN included the full text.

In the statement, id Software noted it has no announced project after Doom: The Dark Ages and its DLC, but IGN understands the studio is prototyping multiple possible ideas with the belief that it can still build its own games. The report also says that, before the layoffs, id Software was considering new game concepts such as a John Wick-style original IP, a new Perfect Dark project, and a multiplayer/co-op Doom game.

MachineGames: safe for now, but the future isn’t guaranteed

MachineGames was not affected by this week’s layoffs, and it reportedly has Wolfenstein 3 in the works. However, because it’s a European studio based in Sweden, it may still face additional cuts later that would need to follow local labor rules—meaning staff could still be wary about what comes next even while they build a new shooter.

As for the Indiana Jones and the Great Circle follow-up, a sequel remains uncertain, despite the game setting up another installment.

Big questions for Bethesda and Xbox

Xbox employees have faced major losses this week. In Sharma’s words, it is “the most significant restructure in Xbox history.” Over the next few years, Microsoft will need to answer difficult questions about more than just profitability—specifically whether it can generate hit games and continue growing Game Pass.

Some observers have speculated about drastic corporate outcomes, including selling off Xbox, spinning it into a wholly owned subsidiary, partnering with another company to run it as a joint venture, or selling parts of the business to the highest bidders. There’s also a hardware angle: the next-generation Xbox, codenamed Project Helix, could reportedly end up costing over $1,000.

And that creates a further timing question: could The Elder Scrolls 6 launch alongside the next console?

Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].