Update July 6 6pm UK: a report in Kotaku describes “brutal” cuts at Zenimax Online Studios, which operates Elder Scrolls Online, suggesting that up to half the development team could be impacted. A post on the game’s forums stated that the studio was committed to the game, but “the roadmaps we previously shared will be shifting.”
Original story, July 6, 2026: Details have emerged on the sweeping job cuts announced today by Xbox CEO Asha Sharma, with workers reporting job losses within the firm’s studios and publishing teams.
The loss of 3,200 staff, around 20% of the organisation, was announced this morning via an internal memo that was also posted to X. Sharma confirmed that five studios were to be divested, with Double Fine and Compulsion Games becoming independent and Ninja Theory and Undead Labs in the process of being acquired. Arkane Lyon has entered a consultation process in line with French employment law.
Subsequently, job losses have been confirmed at Bethesda by staff posting to LinkedIn. Those affected include Piers Duplock, a producer at its Montreal studio, Jean Paul Salman, a systems designer in Austin working on Fallout 76, and Jessica Clark, a community manager in its Maryland home base.
Bloomberg reporter Jason Schreier said in a Bluesky post that Zenimax Online Studios and Id Software were also cutting “a significant number of staff”.
The layoffs follow the company’s first ever round of voluntary redundancies, most of which took effect last week. The cuts are timed to coincide with the beginning of Microsoft’s financial year, meaning that today’s news arrives almost exactly a year after cutbacks closed The Initative and cancelled projects at Rare and Blizzard.
This is a developing story and will be updated.
