Microsoft Xbox began massive layoffs in early July 2026, cutting about 1,600 employees with plans for an additional 1,600 more later this year. The cuts hit several studios including Bethesda Game Studios, Zenimax Online Studios, and id Software [1, 2, 3, 4, 5, 6, 7].
Zenimax Online Studios, the developer behind The Elder Scrolls Online (ESO), lost up to half of its development team in the layoffs. Sources estimate the reductions affecting approximately 212 staff reported in WARN notices, severely impacting the MMO's development [1, 8, 6, 7, 9]. ESO community manager Jessica Folsom acknowledged the disruptions, stating that "the roadmaps we previously shared will be shifting" and that the team is reassessing plans beyond Season One, postponing updated release timelines [1, 8, 6, 9]. She emphasized the team's continued commitment to ESO despite the upheaval.
Bethesda Game Studios, responsible for The Elder Scrolls 6, lost more than 50 key staffers including experienced developers. A Bethesda employee said, "Their loss will have a substantial and cascading effect on the game and morale of this studio." Morale across Bethesda and Zenimax reportedly dropped sharply as employees face uncertainty about future projects [2, 10, 3, 5, 11]. Another Bethesda developer expressed concern that the layoffs will cause delays and increased crunch, warning the use of less-experienced contractors unfamiliar with proprietary tools may extend development timelines [10, 3, 5, 11].
Bethesda leadership confirmed a strategic shift from studio-specific planning toward a unified content roadmap prioritizing major franchises like Elder Scrolls, Fallout, and Halo. Jill Braff, Bethesda’s head, said the aim is "to best position Bethesda for future growth" by focusing on franchise roadmaps [4, 5].
Id Software also suffered heavy cuts, with reports indicating about 136 employees laid off from a workforce of roughly 185, drastically reducing the studio’s size [4, 5].
The layoffs come after 2025’s cancellation of Project Blackbird, a Zenimax MMO, which led to layoffs and the resignation of the studio president [1, 7, 12]. Xbox CEO Asha Sharma described the 2026 reductions as "the most significant restructure in Xbox history," citing the need to focus investment on higher priority projects and major franchises [3, 4, 5].
Despite the turmoil, Elder Scrolls 6 remains in development but is expected to take at least two more years before release [10, 5, 11]. The ESO team plans to share updated details on future content and timelines once reassessment is complete [1, 8, 6].
