Microsoft and Xbox revealed plans to cut around 3,200 jobs across multiple studios, including ZeniMax Media and Bethesda Softworks, by the end of fiscal year 2027 [1, 2, 3]. Approximately 1,600 layoffs took effect immediately with the rest scheduled later this fiscal year [2].
Though significant staff reductions will hit ZeniMax and Bethesda, no studios under their umbrella will close [1, 2, 3]. Xbox is also divesting from four studios, with the fate of Arkane Studios remaining uncertain [2, 3].
ZeniMax plans to concentrate its efforts on its biggest franchises: Fallout, The Elder Scrolls, Doom, Quake, and Wolfenstein [1, 2, 3]. However, the developer behind The Elder Scrolls Online, ZeniMax Online Studios, will face heavy cuts, potentially losing up to half its team [2].
Bethesda intends to evolve from independent studio-driven projects to a franchise-centered content roadmap aligning talent and resources more efficiently. Bethesda head Jill Braff said, "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" [2].
Notably, Starfield was excluded from the list of priority franchises in the new focus [2]. Id Software, which recently released the Doom: The Dark Ages - Revelations DLC on July 7, 2026, faces an uncertain future amid the staff cuts [1, 2]. MachineGames is reportedly developing a new Wolfenstein project potentially linked to an upcoming TV show [1].
Separately, Minecraft developer Mojang will now report directly to Xbox CEO Asha Sharma, with plans to increase investment in the franchise [3]. Sharma emphasized no publicly announced first-party games or projects have been canceled due to the layoffs, stating, "None of our first party publicly announced games or projects are being cancelled as part of these reductions" [3].
The layoffs and strategic shift follow reports on July 6 that Xbox aimed to accelerate development of new Fallout and Elder Scrolls games under Sharma’s leadership [3]. The day after Doom’s DLC launch, ZeniMax Online Studios began Season One for Elder Scrolls Online before shifting their focus [2].
The company will continue implementing the announced restructuring through the fiscal year, completing all layoffs and strategic realignments by the fiscal 2027 end [1, 2, 3].
