Bethesda After the Bloodbath: What Xbox's Layoffs Mean for Elder Scrolls 6, Fallout 5, and Blade

Bethesda didn't escape this week's Xbox layoffs unscathed. Far from it. Bethesda Game Studios, ZeniMax Online Studios, and id Software all took direct hits, and the ripple effects are already reshaping how the company plans to make games like The Elder Scrolls 6 and Fallout 5.

The numbers, drawn from a Maryland WARN Act notice, are stark: 213 employees cut from ZeniMax Online Studios' office in Cockeysville, Maryland, and 166 more from ZeniMax Media Inc. in Rockville, Maryland — 379 jobs gone in that state alone. In Texas, id Software lost 96 staff at its Richardson office, plus another 40 remote positions. Because Bethesda's studios often share staff across blended teams, it's hard to say precisely which projects took the biggest hit. But the scale is impossible to miss.

This is part of a much bigger reckoning across Xbox. Microsoft cut 1,600 jobs on Monday, with another 1,600 expected to go over the next year. New Xbox CEO Asha Sharma has been blunt about the reasoning: studios need to collaborate more, and resources need to concentrate around the biggest franchises — Halo, Minecraft, Candy Crush, Fallout, and The Elder Scrolls among them.

Bethesda boss Jill Braff laid out the same logic to her own staff in an email obtained by IGN, following Sharma's memo. "To be successful in the future, we need to change course," Braff wrote. "We must strengthen our business, return to sustainable growth, and ensure we can continue investing in our franchises and our players." She acknowledged the human cost too: "I know that doesn't make a day like today any easier."

Braff described a shift away from letting each studio plan its own next project, toward a model built around Bethesda's strongest franchises first, with staff and resources assigned to whatever serves that roadmap. In plain terms: less studio autonomy, more centralized franchise planning.

Elder Scrolls 6, still years out, now under a cloud

The Elder Scrolls 6 was announced back in 2018 and remains, by most estimates, at least two more years from release. IGN previously reported that BGS staff fear the layoffs could have a "substantial and cascading effect" on the game's development, with morale taking a real hit and worries about crunch resurfacing.

One Bethesda developer told IGN there's genuine fear that laid-off staff could be replaced by cheaper contract labor unfamiliar with the studio's proprietary tools, which could slow things down rather than speed them up. "We've all been very excited and hyped for TES 6 and this has had a crushing effect on morale," another staff member said, adding that the team was already stretched thin before the cuts.

The studio's union, OneBGS, isn't standing by quietly. It plans to march outside BGS offices in Rockville, Austin, Dallas, and Montreal on July 15. The union says 35 positions were cut in the U.S. and at least 12 more in Montreal, and it's accusing Microsoft and BGS of using the "franchise-based model" language to sidestep bargaining obligations. "Changing a title on a PowerPoint slide does not erase our legal right to a say in our working conditions," the union said.

Despite all that, a source familiar with Bethesda's restructuring told IGN the studio's ambitions for The Elder Scrolls 6 haven't changed, and development remains on track — for whatever "on track" means when the game is still roughly two years out.

Fallout is getting bigger, not smaller

Fallout, meanwhile, appears to be entering an expansion phase rather than a contraction. According to Bloomberg, Obsidian Entertainment — the studio behind Fallout: New Vegas, which was also hit by the Xbox layoffs — is now developing a new Fallout game, with Bethesda supporting that effort. It's a clear signal that Sharma wants more Fallout content, faster.

A source told IGN there are multiple Fallout projects underway across Bethesda and its partners, including Fallout 5. Development chief Todd Howard has said Fallout 5 will follow The Elder Scrolls 6 and will account for canon established by the Fallout TV series. Fallout 76, the long-running multiplayer entry, remains a major operation with hundreds of developers still working on it and millions of active players, and there are no current plans to change that. Fallout Shelter continues as well, Amazon's Fallout TV show is filming its third season, and a Fallout 3 remaster is widely assumed to be in the works even without official confirmation.

Elder Scrolls Online's roadmap gets rewritten

The Elder Scrolls Online didn't come through clean either. Its development roadmap has already changed as a result of the layoffs, though it's unclear exactly how many staff working directly on the game were let go. A source familiar with the studio told IGN that ZeniMax Online is sticking with its new seasonal content model while also looking to work more closely with Bethesda Game Studios — support that could ultimately be aimed at helping push The Elder Scrolls 6 toward release.

Starfield, Arkane, and the uncertain middle

Starfield was notably missing from Bethesda's list of priority franchises, which worried fans hoping the 2023 release might grow into a third major series alongside Elder Scrolls and Fallout. Sources told IGN the current Starfield roadmap hasn't changed and the team remains focused on updates and content, though what that looks like long-term is still unclear. A Nintendo Switch 2 version is reportedly in development.

Arkane Lyon, the French studio behind Deathloop, faces a murkier future. Microsoft confirmed the studio has begun consultations with its Works Council in France to review "strategic options." The independent French union STJV told IGN it's waiting on an internal meeting between studio leadership and worker representatives for more clarity. There's still hope the studio could find a buyer, following the path of Ninja Theory and Undead Labs, both of which found new ownership after previous Microsoft restructuring. IGN understands that before this week's cuts, Arkane's Marvel game Blade was on track for a reveal in early 2026 and a release in the fourth quarter of 2027. Marvel Games has not responded to IGN's request for comment.

id Software pushes back on the doom narrative

id Software issued a public statement this week disputing claims that its capacity had been gutted. The studio said its current headcount matches what it had during development of the widely praised Doom 2016, and insisted it remains capable of making "great games." It also pushed back specifically on reports suggesting only one person remained working on id Tech, the engine used by both id and MachineGames. Xbox told IGN there are "dozens of people working on id Tech across multiple locations," calling the earlier reports inaccurate.

In its statement, id wrote: "We still have the crew we need to build the games and tech we're known for... We're going to keep building the great games and tech that have defined us for the past 35 years, and we're looking forward to seeing you at QuakeCon this August."

id has no announced project following Doom: The Dark Ages and its DLC, but IGN understands the studio is prototyping several potential ideas. According to GamesBeat, those concepts included an original John Wick-style IP, a new Perfect Dark entry, and a multiplayer or co-op Doom game.

MachineGames, based in Sweden, wasn't touched by this round of cuts and continues work on Wolfenstein 3. As a European studio, any future layoffs there would be bound by local labor law. A sequel to Indiana Jones and the Great Circle remains unconfirmed despite the first game's ending setting one up.

The bigger picture

Sharma has called this "the most significant restructure in Xbox history," and the fallout extends well beyond any single studio. Microsoft's gaming division faces pressure to grow profit and Game Pass subscriptions while still shipping games people want to play. Speculation is already swirling about more dramatic outcomes down the line, from a partial sale of Xbox to a joint venture structure. Add in reports that Microsoft's next-generation console, codenamed Project Helix, could carry a price tag north of $1,000, and it's clear Xbox is heading into a genuinely uncertain stretch. Whether The Elder Scrolls 6 ends up launching anywhere near that hardware's debut remains anyone's guess.