Xbox lays off 379 Bethesda and 96 id Software staff in sweeping restructure

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Bethesda was hit hard by this week’s Xbox layoffs, with cuts to The Elder Scrolls and Fallout developer Bethesda Game Studios, Doom developer id Software, and The Elder Scrolls Online developer ZeniMax Online Studios, among other parts of the business.

A Maryland WARN Act notice shows 213 employees were laid off from ZOS's office in Cockeysville, MD, and 166 from ZeniMax Media Inc. in Rockville, MD, for a total of 379. 96 staff who worked at id Software's office in Richardson, Texas, were cut, alongside a further 40 remote roles. While it’s difficult to pin down exactly what the affected staff were working on at these studios because there are blended teams across Bethesda locations, the WARN numbers undoubtedly make for difficult reading.

The restructure at Xbox — 1,600 staff lost their jobs on Monday, with another 1,600 to go over the course of the next 12 months — has called into question the future of not just the studios Microsoft has on its books, but the quality of the games it’s working on. New Xbox CEO Asha Sharma’s strategy is clear: studios will collaborate more closely from now on, with a focus on bigger franchises such as Halo, Minecraft, Candy Crush, Fallout, and The Elder Scrolls. As revealed by IGN this week, in an email to Bethesda staff sent following Sharma's memo on Monday , Bethesda boss Jill Braff said the layoffs and change in strategy “reflect the realities of our industry and business – and our responsibility to ensure Bethesda is operating from a more stable foundation.”

"To be successful in the future, we need to change course,” Braff continued. “We must strengthen our business, return to sustainable growth, and ensure we can continue investing in our franchises and our players. I know that doesn't make a day like today any easier.”

But what does that actually mean for Bethesda going forward? Without naming games, Braff said “to best position Bethesda for future growth, we are shifting from a planning model primarily centered on what's next for each independent studio to one that focuses on our strongest franchises and determining the content roadmap that best serves our players and Bethesda as a whole.”

“From there, we’ll align the right talent, technology, and resources across the organization to deliver on those priorities,” Braff added.

While Xbox sorts its new strategy out, remaining staff are left to wonder if they will be next as part of future rounds of layoffs. After all, Microsoft still has over 1,000 Xbox staff to cut before the end of its financial year. It is an anxious time across Xbox, as it is across the wider video game industry.

The Elder Scrolls 6 — what’s happening with it?

This week, IGN reported on concern expressed by staff at BGS that the Xbox layoffs would have a "substantial and cascading effect" on the development of The Elder Scrolls 6 . Morale took a hit, we heard, and there were fears of future development crunch. The Elder Scrolls 6 is reportedly at least two more years away from release , despite being announced in 2018, and there are fears it could even be delayed.

"There is a fear that we are going to be replaced by cheaper, contracted labor, or we will hire folks to replace them that will need to be onboarded (our tools are proprietary, other devs aren't going to know how they work) resulting in more delays, and we'll need to crunch to make up the time," one Bethesda developer told IGN.

"We've all been very excited and hyped for TES 6 and this has had a crushing effect on morale," said another staff member. "We were already running a tight ship and are worried about this delaying the game (though a final release date was not yet chosen as far as we know)."

Meanwhile, the BGS union, OneBGS, plans to march outside the studio’s four offices (Rockville, Austin, Dallas, and Montreal) on July 15. In a note sent to IGN, the union said 35 positions at BGS were cut in the U.S. and at least 12 more in Montreal, Canada.

“Microsoft and BGS are trying to frame these 35 cuts as an ‘entrepreneurial change in the scope of business,’ claiming they are transitioning from a ‘studio-based business model to a franchise-based model’ to dodge their legal obligation to bargain the decision with us,” the union alleged. “We completely reject this corporate wordplay. Changing a title on a PowerPoint slide does not erase our legal right to a say in our working conditions.”

As OneBGS sets out to apply pressure on Microsoft to negotiate how these layoffs will impact staff, work on games continues, even under such difficult circumstances. A source familiar with Bethesda’s restructure expressed confidence in BGS’ continued ability to develop The Elder Scrolls 6, and insisted the studio's plans and ambitions for the hotly anticipated RPG remained the same, despite the layoffs.

Anything can — and usually does — change during video game development, so it’s impossible to say now if The Elder Scrolls 6 will suffer a delay, either internally or publically. But as it stands, the game is said to be on track, even if being on track means it’s two years away from release.

Fallout 5, Fallout 76, Fallout Shelter, and a Fallout game from Obsidian, with more Fallout to come

Bloomberg has reported that Fallout: New Vegas developer Obsidian Entertainment is now working on a new Fallout game having suffered from the Xbox layoffs itself. Bethesda is said to be working to support Obsidian on development of this Fallout game. It is a clear signal of intent: Sharma wants Bethesda to do more Fallout more quickly.

A source familiar with the plans told IGN that there are several Fallout projects in development across Bethesda and its partners, including Fallout 5 . It feels ridiculous to consider Fallout 5 right now, but Bethesda development chief Todd Howard has spoken openly about it coming after The Elder Scrolls 6, and has confirmed that it will take into account the canon events of the Fallout TV series. The intention is very much for Fallout 5 to be released, eventually.

The “live” Fallout project is Fallout 76, which IGN understands remains a significant operation, and there are no changes to that development team’s plans as of yet. A source said Fallout 76 still has hundreds of developers working on it, and the multiplayer game retains millions of players.

Meanwhile, Fallout Shelter is alive and kicking. And of course, Amazon’s Fallout TV show continues, with Season 3 filming now. The existence of a Fallout 3 remaster is an open secret at this point .

Sharma’s new drive for collaboration across Xbox studios on its biggest franchises applies to Fallout, as you'd expect, and the Obsidian Fallout game is a part of that. And there is a lot more Fallout coming from BGS, too. The question is, how fast can new Fallout projects be turned around?

Concern over The Elder Scrolls Online

One game that has undoubtedly been impacted by the Xbox layoffs is The Elder Scrolls Online, whose development roadmap was forced to change as a result . It’s unclear exactly how many staff directly working on ESO were cut, but there is justifiable concern about the fate of those who remain, as well as the game itself.

A source familiar with the situation at the studio told IGN that ZOS is supporting the new season model for ESO while also looking for ways to collaborate more closely with BGS to support the Elder Scrolls franchise as a whole, which sounds to me like helping get The Elder Scrolls 6 out the door.

What next for Starfield?

Following the announcement of the Xbox layoffs, fans were quick to point out that Starfield was absent from Bethesda's priority list . Starfield largely failed to meet fan expectations upon its 2023 launch, and subsequent updates and expansions haven't really moved the needle. Still, some of the game's more hardcore fans had hoped that Starfield would go on to at least get more expansions, and maybe even a sequel, establishing itself as Bethesda's third franchise. Sources told IGN that there are no changes to the current Starfield roadmap, and the team is still working on updates and content. What that means exactly, remains unclear. A Nintendo Switch 2 version is reportedly in the works.

Hope for Arkane and Marvel’s Blade to survive

Microsoft has said Arkane Lyon studio management had begun a consultation with the Works Council in France to "review potential strategic options.” Le Syndicat des Travailleureuses du Jeu Vidéo (STJV), the French non-representative independent video game workers union, told IGN it was waiting for an internal meeting between studio leadership and worker representatives to learn more.

The situation with Arkane Lyon, developer of Deathloop, could drag on for some time, leaving staff facing an anxious wait to discover their fate. But the hope is the studio will eventually find a buyer, as Hellblade developer Ninja Theory and State of Decay developer Undead Labs have done, and that Blade will see the light of day.

IGN understands that prior to this week's layoffs, Blade was on track for a reveal early next year and a release Q4 2027. IGN has asked Marvel Games for comment but it has yet to respond.

id Software hopes to make great games again

Today, Doom developer id Software issued a statement responding to the layoffs , saying it was now at the staffing level it had back when it made the much-loved 2016 Doom reboot. It also insisted it was still capable of making “great games,” and pushed back on the suggestion that there’s essentially no-one left at the company working on id Tech, the game engine it and fellow Bethesda-owned studio MachineGames uses to build their games. Xbox confirmed to IGN that "there are dozens of people working on id Tech across multiple locations," and that previous reports that there was only one person left in Texas are "inaccurate."

Here’s the statement in full, posted to id Software's X / Twitter page :

Thank you all for the support this week.

While our studio was impacted, those changes were spread across teams. We still have the crew we need to build the games and tech we're known for. The team today is about the same size we were when making Doom 2016. We have always had a flat studio where everyone is a maker, and we will remain true to that philosophy moving forward.

We are focused on supporting each other and the team members impacted. We're going to keep building the great games and tech that have defined us for the past 35 years, and we're looking forward to seeing you at QuakeCon this August.

While id Software currently has no announced project following the release of Doom: The Dark Ages and its DLC, IGN understands that the studio is prototyping a number of potential projects, with the belief it is still capable of building its own games. According to GamesBeat , id was formulating new game ideas, such as a John Wick-style original IP, a new Perfect Dark game, and a multiplayer / co-op Doom game, before the layoffs hit.

MachineGames safe for now

MachineGames was unaffected by this week’s layoffs, with Wolfenstein 3 in the works . But as a European studio (it’s based in Sweden), it may face cuts further down the line, cuts that would have to abide by local labor law, leaving staff looking over their shoulder even as they build a new shooter. A sequel to the well-received Indiana Jones and the Great Circle, however, remains up in the air, despite it setting up another entry.

Big questions remain for Bethesda, and for Xbox

Xbox staff have been on the receiving end of a bloodbath this week. By Asha Sharma’s admission, it is “the most significant restructure in Xbox history.” Microsoft’s gaming business faces profound questions it must answer over the next few years, not just on its ability to grow profit, as Sharma has said Xbox must, but on its ability to make hit games and grow Game Pass. Some are speculating that Microsoft could sell Xbox off, spin it off as a wholly-owned subsidiary, partner with another company to run it as a join venture, or sell parts of the business to the highest bidders. Then there’s the hardware “crisis,” which could see the next-gen Xbox, codenamed Project Helix, cost north of $1,000.

Could The Elder Scrolls 6 launch alongside it?

Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.