Remaining Xbox staff are being “asked to do more with less” following the division’s first wave of 1,600 job cuts this week, with a further 1,600 redundancies still to come across the fiscal year, as reported by Bloomberg‘s Jason Schreier.
Here’s the context: Microsoft Gaming cut 1,600 roles on Monday as the opening phase of a 3,200-job restructuring spanning the full fiscal year – reportedly around a fifth of the division’s workforce. Alongside the headcount reductions, four first-party studios were spun off or sold, and Arkane Studios – currently developing Marvel’s Blade – remains in an unresolved divestment process due to complications under French labour law.
Schreier’s Bloomberg piece, behind a paywall but paraphrased by Push Square, corroborates that both ZeniMax Online Studios and id Software have been significantly gutted, with id described as having been reduced to roughly support-studio size. id Software pushed back on that framing in a statement posted to its official account, noting that its current headcount is comparable to the team that shipped Doom (2016) – though it acknowledged the cuts were real. Even Bethesda Game Studios, the crown jewel of the ZeniMax acquisition and the team building The Elder Scrolls 6, has not been spared; Bethesda staff have been among the most vocal about the human cost of the cuts.
Honestly, the specific mechanism Schreier is documenting here is the part that tends to get lost in layoff coverage: what happens to the people who weren’t let go. The job losses are a headline number. The real damage accumulates quietly – in the developers left carrying the workload of colleagues who are gone, on active projects that still have release commitments, under the psychological weight of knowing a second wave is already scheduled. Schreier reports that parts of the organisation will have to spend the next 12 months trying to keep up morale in the often grueling circumstances of making video games, while wondering if they will be next.
That’s not a short-term morale dip – it’s a structural condition that compounds over time. The internal organisational confusion that has defined Xbox Game Studios in recent years makes the situation harder to navigate, not easier. Teams that have already lost colleagues are now expected to absorb their responsibilities while remaining emotionally invested enough to ship quality work. The corporate framing of this as a necessary reset doesn’t change what it asks of the people still in the building.
What remains unclear is the precise scope of which teams and active projects are most exposed as the second 1,600 cuts roll out. The Elder Scrolls 6 situation is particularly opaque – Bethesda Game Studios has already taken hits to a project that was already years from completion, and the extent of that damage won’t be visible until production either stabilises or slips further. The ultimate fate of Arkane Studios is also unresolved, with French labour law creating a timeline that Microsoft does not fully control.
What to watch: The next 12 months of cuts will be the real test of whether Xbox‘s reset is a coherent strategy or an extended contraction with no clear floor. Any official guidance on studio mandates, project status for franchises like The Elder Scrolls 6, or updates on the Arkane divestment will be significant signals. Financial calls and any upcoming showcases are the most likely venues for that clarity – if it comes at all.
If you’re a developer currently working inside one of these studios, what would it take for leadership to actually rebuild trust at this point? And for players – does the uncertainty around teams like Bethesda and id Software change how you think about the games they still have in development?
