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Xbox layoffs hit id Software and ZeniMax as Microsoft cuts 20% of its gaming workforce

Xbox layoffs hit id Software and ZeniMax as Microsoft cuts 20% of its gaming workforce
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Microsoft is gutting its Xbox division in what Xbox boss Asha Sharma is calling the most significant restructure in Xbox history. Around 20% of the Xbox workforce will be cut across the current fiscal year, five studios are being shuttered, and the first wave of 1,600 layoffs landed today — with another 1,600 cuts still to come.

Id Software and ZeniMax Online Studios are not closing, but both are taking heavy hits. According to Bloomberg's Jason Schreier, a significant number of staff were let go in today's wave. Something Wicked Games CEO Jeff Gardiner — a former Bethesda Studios project lead — put a specific number on id Software's losses: 95 employees gone. Bethesda Game Studios shed 35 workers today. Sharma's open letter says Xbox will concentrate resources on higher-priority projects at studios including Bethesda and ZeniMax, and Schreier reports those teams will keep working across their full IP slate — Fallout, The Elder Scrolls, Wolfenstein, Doom, and Quake all remain in play.

The restructure is the latest and most dramatic chapter in Microsoft's turbulent post-Activision Blizzard acquisition period. The company paid $69 billion for Activision Blizzard in 2023, and has since struggled to justify the scale of its gaming operation. Earlier rounds of layoffs already hit Bethesda-adjacent teams, and the closure of studios like Tango Gameworks last year drew widespread criticism. The decision to preserve major franchises while cutting headcount suggests Microsoft is narrowing its first-party ambitions rather than abandoning them entirely.

Sharma stated that no publicly announced first-party games are being canceled as part of these cuts — meaning InXile's Clockwork Revolution and The Coalition's Gears of War: E-Day are still on track, as are Senua's Saga and State of Decay 3 from the departing studios Ninja Theory and Undead Labs. That last point comes with an asterisk: once new owners take over those studios, the fate of those projects could shift. The status of Arkane Studios' Marvel's Blade is also unclear for now.

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