Microsoft Xbox layoffs threaten Bethesda's The Elder Scrolls 6 and other flagship games

Microsoft announced a restructuring of its Xbox gaming division, cutting 3,200 jobs – the largest reduction in Xbox history. The first wave removed 1,600 employees, with a second wave of another 1,600 planned over the next year. The cuts hit several Microsoft‑owned studios, including Bethesda Game Studios, id Software, ZeniMax Online Studios and other ZeniMax subsidiaries.

Bethesda developers said the layoffs have damaged morale and could cause “substantial and cascading” delays to the long‑awaited *The Elder Scroller 6*. One source told IGN, “There is a fear that we are going to be replaced by cheaper, contracted labor… resulting in more delays and we’ll need to crunch to make up the time.” Similar concerns were raised about the continued support of *Fallout 76*, with staff unsure how to maintain updates without external help.

id Software lost roughly a quarter of its workforce – 136 people – prompting speculation that planned projects such as a new *Perfect Dark* title are now in jeopardy. The studio issued a statement asserting it still has the crew needed to develop games, while co‑founder John Carmack later remarked, “My words about Microsoft being a good steward of the brand have not stood the test of time.”

Bethesda president Jill Braff said the company is shifting to “focus on our strongest franchises” and aligning talent, technology and resources to secure sustainable growth. The BGS union announced a protest march outside the studio’s four offices on July 15. The layoffs have sparked industry‑wide anxiety about further cuts and the future of Microsoft’s major gaming franchises.