Xbox Layoffs Hit Obsidian, Bethesda, ZeniMax Online and More

Xbox is cutting 3,200 jobs, around 20% of the organization, in a major round of layoffs announced by Xbox CEO Asha Sharma. The cuts are already being felt across several Microsoft-owned studios, including Obsidian, Bethesda, ZeniMax Online Studios, id Software and Sledgehammer Games.

The restructuring also includes five studio divestments. Double Fine and Compulsion Games are set to become independent, while Ninja Theory and Undead Labs are reportedly in the process of being acquired. Arkane Lyon has entered a consultation process under French employment law.

Public posts on Bluesky and LinkedIn point to layoffs at Obsidian, the studio behind The Outer Worlds and Pentiment. Those affected reportedly include longtime art director Daniel Alpert, who had been with the studio for 21 years, and writer AK Fedeau. PC Gamer noted that Obsidian would need to provide advance notice under California WARN rules if more than 50 employees were affected, but no Obsidian listing appeared on the state tracker at the time of writing.

ZeniMax Online Studios, which runs The Elder Scrolls Online, appears to be facing especially deep cuts. Kotaku reported that as much as half of the development team could be affected. A forum post from the studio said it remains committed to the MMO, though previously shared roadmaps “will be shifting.”

Separate LinkedIn posts indicate job losses at Bethesda’s Montreal, Austin and Maryland offices, including roles tied to Fallout 76 and community management. Bloomberg’s Jason Schreier also reported on Bluesky that ZeniMax Online Studios and id Software were cutting a significant number of staff.

The layoffs follow Microsoft’s recent voluntary redundancy program and arrive almost exactly a year after another round of Xbox cuts that closed The Initiative and canceled projects at Rare and Blizzard.