Microsoft Xbox cuts refocus Bethesda, Obsidian and id Software on Fallout and other flagship franchises

Microsoft announced a sweeping restructuring of its Xbox Game Studios division, targeting thousands of jobs across its internal studios. The layoffs affect major studios including Bethesda Game Studios, Obsidian Entertainment and id Software. Obsidian lost roughly a quarter of its staff (60‑70 employees), while id Software saw about half its workforce cut (around 90 positions).

In response, Bethesda said it will concentrate resources on its strongest IPs – Fallout, The Elder Scrolls, Doom, Quake and Wolfenstein – and will continue support for already announced projects. The restructuring led to the cancellation of several unannounced titles, most notably the planned sequel Avowed 2 at Obsidian. Instead, Obsidian will begin work on a new Fallout game, reportedly led by design director Josh Sawyer, the creator of Fallout: New Vegas. Ongoing projects such as Grounded 2 and The Outer Worlds 2 are expected to proceed. Sources for the information include Bloomberg, Kotaku, Game Developer and internal Xbox communications.