Obsidian, Bethesda, Id, and Zenimax Online Studios face job cuts in Xbox layoffs
July 9, 2026 Update: ZeniMax Online Studios, as indicated by a WARN notice in Maryland, saw 213 positions eliminated, with 166 of these at ZeniMax Media.
Similarly, a WARN notice in California, referenced by Game File, disclosed the layoff of 52 employees at Obsidian, comprising 43 at the California office and nine working remotely within the state.
July 8, 6:30 PM UK Update: After 37 years, Xbox platform vice president Kevin LaChapelle, who spearheaded the backward compatibility and cloud gaming initiatives, has been let go.
LaChapelle shared on LinkedIn (thanks to VGC): "Throughout my career, working in various divisions, my fondest memories are leading the talented engineers in the Xbox Backward Compatibility program."
He remarked: "Witnessing Phil unveil the program at E3 2015 was extraordinary, and the crowd’s enthusiasm was remarkable."
LaChapelle expressed confidence in the future shift of entertainment towards streaming and wished the best for Xbox’s future.
July 8, 2026 Update: A Texas WARN notice verified layoffs of 136 developers at id Software, with an additional 22 from Bethesda Game Studios in Austin, totaling 158 job cuts.
Chris Kerr from Game Developer highlighted that 146 of those let go were members of the CWA union.
Details submitted to the Texas Workforce Commission outlined widespread impacts across various business units, with a notable 26 roles cut from QA.
July 7, 2026 Update: Reports indicated that Obsidian's workforce had decreased by 60 to 70 employees. One source informed Kotaku that remaining staff had yet to receive guidance on future project management amid these changes.
Meanwhile, 3D Realms founder Scott Miller suggested most of Id Software’s coding staff had been laid off. Former project lead at Bethesda Game Studios, Jeff Gardiner, estimated a total of 95 layoffs there.
July 6, 10 PM UK Update: Reports from BlueSky and LinkedIn highlighted layoffs at Obsidian, creators of The Outer Worlds and Pentiment. Notable departures included Daniel Alpert, a 21-year veteran Art Director, and writer AK Fedeau.
LinkedIn posts corroborated prior reports of extensive layoffs at Zenimax Online Studios, affecting roles in UX, usability, alongside layoffs at Id Software and Sledgehammer Games.
PC Gamer noted Obsidian’s responsibility to provide early notice if layoffs exceed 50 employees. Yet, the California WARN Act Tracker didn’t list Obsidian, indicating fewer than 50 employees were affected.
July 6, 6 PM UK Update: According to Kotaku, significant reductions at Zenimax Online Studios, responsible for Elder Scrolls Online, suggest up to half the team may be affected. A forums post by the studio stated commitments to the game but noted alterations would be made to previously shared roadmaps.
Original Story, July 6, 2026: Xbox CEO Asha Sharma disclosed extensive job cuts today, impacting teams across the company’s studios and publishing sectors.
The reduction involved 3,200 positions, approximately 20% of the workforce, as announced in an internal memo available on X. Sharma confirmed plans to divest five studios, making Double Fine and Compulsion Games independent while Ninja Theory and Undead Labs were set for acquisition. Arkane Lyon entered a consultation following French labor laws.
Staff affected at Bethesda posted their job loss experiences on LinkedIn, including producer Piers Duplock in Montreal, systems designer Jean Paul Salman in Austin on Fallout 76, and community manager Jessica Clark at the Maryland headquarters.
Bloomberg journalist Jason Schreier wrote on BlueSky that Zenimax Online Studios and Id Software were undergoing substantial staff reductions.
The layoffs follow a voluntary separation program, most of which concluded the preceding week. These layoffs mark the start of Microsoft's financial year, occurring nearly one year after cuts led to the closure of The Initiative and project cancellations at Rare and Blizzard.
This story is ongoing and will be updated with further details.