Microsoft Xbox layoffs hit id Software, Bethesda and ZeniMax studios

Microsoft announced a restructuring of its gaming division that will cut 4,800 jobs worldwide, including roughly 3,200 positions in the Xbox business. The company described the plan as a "reset" aimed at improving margins that have fallen sharply.

The cuts have devastated several first‑party studios. id Software lost about 136 of its 185 employees – roughly half its staff – just before the release of the Doom: The Dark Ages – Revelation expansion, raising questions about the future of its proprietary id Tech engine. ZeniMax Online Studios, the team behind The Elder Scrolls Online, saw more than 200 jobs eliminated and senior leaders such as studio director Joe Burba and executive producer Susan Kath depart. Bethesda Game Studios also reported a wave of talent losses.

Microsoft is spinning off or selling a number of studios, including Compulsion Games and Double Fine, while negotiating the future of others like Arkane. Executives cite financial pressure: the Xbox division is losing 64 cents for every dollar invested and operating at margins three‑to‑10 times lower than comparable businesses.

Employees describe a climate of fear and uncertainty. One former staff member told Game Developer, "I don't know how anyone remaining at Xbox Studios can feel safe," and an anonymous id Software developer said, "There are no advantages to belonging to Microsoft." Unions and industry observers have criticized the lack of communication and the loss of institutional knowledge across the network of studios.