Microsoft called it "the most significant restructure in Xbox history." In practice, that meant thousands of job cuts, four studios cut loose — Double Fine and Compulsion Games sent back to their indie roots, Ninja Theory and Undead Labs sold off — and deep cuts at the studios that remained standing. Two weeks on, the fallout is still spreading, and the messaging war over what it all means is just as loud as the layoffs themselves. At ZeniMax Online Studios, the team behind The Elder Scrolls Online, senior developers say the studio has shrunk back to roughly its 2015–2018 headcount — the era that produced the acclaimed Wrothgar and Summerset DLCs. According to WARN Act filings, ZeniMax Online cut 213 employees this round, on top of 62 let go in 2025 after the cancellation of its unannounced MMO Blackbird. id Software, maker of DOOM: The Dark Ages, put out a similar line, saying its team is now "about the size we were when making Doom (2016)," after cutting 136 people. Xbox followed up with its own statement and executives making the media rounds, trying to reassure fans that ESO and DOOM aren't being quietly walked into maintenance mode. Whether that reassurance lands is another matter. PC Gamer's Ted Litchfield noted the uncomfortable subtext: pointing to matching headcounts from a decade ago is "an admission of undoing a decade of growth," and comparisons to Bungie and BioWare — both of which cycled back to "golden age" staffing levels through repeated layoffs without recapturing their old form — aren't encouraging. Community figures relaying comments from ZeniMax staff at a fan event in Germany struck a more hopeful note, insisting "it really is not the end yet" for ESO, with a new content roadmap reportedly in the works. Obsidian Entertainment took a different kind of hit: about a quarter of its staff, alongside the reported cancellation of every unannounced project — including, seemingly, Avowed 2, though French outlet Gamekult reports a team is still quietly working on it. One survivor is a new Fallout project, reportedly headed by New Vegas director Josh Sawyer. Game director Brandon Adler, now leading an unannounced project at the studio, used LinkedIn to push back hard on "cold take artists" claiming Obsidian isn't the studio it used to be: "The through line from Knights of the Old Republic 2 to our current games is pretty clear," he wrote, while acknowledging "this has been an extremely difficult week" that cost him "some of my best friends." Meanwhile, the human cost has curdled into something uglier: Microsoft's communications lead had to publicly shoot down racist conspiracy theories suggesting the layoffs were about replacing staff with foreign workers. And on July 15, Bethesda's unionized employees — organized under the OneBGS banner — are staging a "Save Our Devs" march outside ZeniMax offices in Rockville, Austin, Dallas, and Montreal. The studios insist the work continues. The workers who are still there are exhausted, defensive, and — as Adler's post makes clear — done pretending everything is fine while grieving for the colleagues who aren't.
