Xbox Layoffs Hit Bethesda Hard: id Software Loses Half Its Staff, ESO Team Gutted

Microsoft's Xbox restructuring is hitting Bethesda Softworks studios harder than anywhere else. Xbox CEO Asha Sharma's "reset" plan — announced July 6 — calls for 3,200 job cuts, four studio divestitures, and a sharp focus on fewer, bigger franchises. The developers behind DOOM and Elder Scrolls Online are bearing much of the cost.

The cuts

id Software, the studio responsible for the DOOM series, lost around 95 employees — roughly half of its approximately 200-person staff — according to Jeff Gardiner, CEO of Something Wicked Games and a former Bethesda lead. Bethesda Game Studios itself shed at least 35 workers. The Bethesda Game Workers Union, formed in 2024, confirmed many of its members were let go despite the union's recent formation offering no meaningful protection, per PC Gamer.

ZeniMax Online Studios, the team keeping The Elder Scrolls Online running, appears to have been hit just as badly. Kotaku reports that up to half the development team was cut, with more than 20 employees updating their LinkedIn profiles to say they are looking for work. Community manager Jessica Folsom confirmed the game continues but acknowledged that "roadmaps we previously shared will be shifting." Worth noting: Microsoft already cancelled ZeniMax Online's ambitious unannounced MMORPG, codenamed Blackbird, back in July 2025.

Jason Schreier at Bloomberg confirmed that neither id Software nor ZeniMax Online is shutting down entirely, but both face "significant" staff reductions. Microsoft has not released studio-by-studio headcount figures.

What survives — and what it means

Sharma's internal memo lists the franchises Xbox intends to keep: Elder Scrolls, Fallout, Wolfenstein, DOOM, and — perhaps surprisingly — Quake, a series that has been effectively dormant outside of remaster releases for years. That's a broader slate than the "only two franchises" rumors that circulated before the announcement.

Four studios are being offloaded entirely: Double Fine and Compulsion Games are going independent, while Ninja Theory and Undead Labs are being sold. Arkane Lyon, the French studio developing Marvel's Blade and Marvel's Venom, is subject to a mandatory consultation process under French labor law — meaning its fate won't be decided as quickly as its US counterparts.

Sharma cited Xbox margins running "3–10x lower" than comparable platform businesses as the driving logic. For players, the immediate concern is support continuity on live games like ESO and the future cadence of DOOM updates — both now in question.