Xbox layoffs: Positions cut at Obsidian, Bethesda, Id Software, and ZeniMax Online Studios

Evening Update July 6: According to BlueSky and LinkedIn posts, job reductions have occurred at Obsidian, the company behind The Outer Worlds and Pentiment, affecting people like Daniel Alpert, who served as an Art Director for 21 years, and writer AK Fedeau.

LinkedIn posts confirm Kotaku's earlier reports of extensive layoffs at Zenimax Online Studios, affecting UX professionals and other jobs at Id Software and Sledgehammer Games, known for Call of Duty.

PC Gamer notes that advance layoff notices are required from Obsidian if over 50 employees are impacted. However, Obsidian is currently not listed on the California WARN Act Tracker, suggesting the number is below that threshold.

Earlier Update July 6: As reported by Kotaku, substantial job cuts took place at Zenimax Online Studios, which manages Elder Scrolls Online. Although up to half the team might be affected, the studio remains committed to the game, with future plans undergoing alterations.

Original Report July 6, 2026: Xbox CEO Asha Sharma announced today substantial workforce reductions, with dismissals occurring across the company's studios and publication sectors.

Today, the organization disclosed plans to cut 3,200 jobs, equating to roughly 20% of its workforce. An internal memo shared publicly via X confirmed five studios would be sold off, with Double Fine and Compulsion Games gaining independence, and deals underway for Ninja Theory and Undead Labs, while Arkane Lyon follows French employment law procedures.

Layoffs at Bethesda have been verified by employee LinkedIn updates, with Piers Duplock, a producer in Montreal, Jean Paul Salman, a systems designer in Austin involved with Fallout 76, and Jessica Clark, a community manager in Maryland, all being affected.

Jason Schreier, a Bloomberg reporter, indicated in a Bluesky post that Zenimax Online Studios and Id Software are also seeing significant staff reductions.

These layoffs coincide with Microsoft's recent voluntary redundancy efforts, implemented just before the start of Microsoft's fiscal year, happening nearly a year after closures at The Initiative and halted projects at Rare and Blizzard.

This article is being updated as new information becomes available.