Fallout 5, The Elder Scrolls 6, Blade, and More: Amid Massive Xbox Layoffs, What's the State of Bethesda?

Bethesda was hit hard by this week's Xbox layoffs, with cuts at The Elder Scrolls and Fallout developer Bethesda Game Studios (BGS), Doom developer id Software, and The Elder Scrolls Online developer ZeniMax Online Studios (ZOS), among other parts of the business.

A Maryland WARN Act notice reveals 213 employees were laid off from ZOS's office in Cockeysville, MD, and 166 from ZeniMax Media Inc. in Rockville, MD, totaling 379. Another 96 staff at id Software's office in Richardson, Texas, were cut, along with 40 remote roles. While it's hard to pinpoint exactly which projects were affected due to blended teams across Bethesda locations, the WARN numbers make for grim reading.

The Xbox restructuring—1,600 staff lost their jobs on Monday, with another 1,600 to go over the next 12 months—has raised questions about the future of Microsoft's studios and the quality of games in development. New Xbox CEO Asha Sharma's strategy is clear: studios will collaborate more closely, focusing on bigger franchises like Halo, Minecraft, Candy Crush, Fallout, and The Elder Scrolls. As IGN revealed this week, in an email to Bethesda staff following Sharma's memo, Bethesda boss Jill Braff said the layoffs and strategy change "reflect the realities of our industry and business—and our responsibility to ensure Bethesda is operating from a more stable foundation."

"To be successful in the future, we need to change course," Braff continued. "We must strengthen our business, return to sustainable growth, and ensure we can continue investing in our franchises and our players. I know that doesn't make a day like today any easier."

But what does this mean for Bethesda going forward? Without naming specific games, Braff said "to best position Bethesda for future growth, we are shifting from a planning model primarily centered on what's next for each independent studio to one that focuses on our strongest franchises and determining the content roadmap that best serves our players and Bethesda as a whole." She added, "From there, we’ll align the right talent, technology, and resources across the organization to deliver on those priorities."

While Xbox sorts out its new strategy, remaining staff are left wondering if they will be next in future layoff rounds. After all, Microsoft still has over 1,000 Xbox staff to cut before the end of its financial year. It's an anxious time across Xbox, as it is across the wider video game industry.

This week, IGN reported on concerns from BGS staff that the Xbox layoffs would have a "substantial and cascading effect" on The Elder Scrolls 6 development. Morale took a hit, and there were fears of future development crunch. The Elder Scrolls 6 is reportedly at least two years away from release, despite being announced in 2018, and there are fears it could even be delayed.

"There is a fear that we are going to be replaced by cheaper, contracted labor, or we will hire folks to replace them that will need to be onboarded (our tools are proprietary, other devs aren't going to know how they work) resulting in more delays, and we'll need to crunch to make up the time," one Bethesda developer told IGN.

"We've all been very excited and hyped for TES 6 and this has had a crushing effect on morale," said another staff member. "We were already running a tight ship and are worried about this delaying the game (though a final release date was not yet chosen as far as we know)."

Meanwhile, the BGS union, OneBGS, plans to march outside the studio’s four offices (Rockville, Austin, Dallas, and Montreal) on July 15. In a note to IGN, the union said 35 positions at BGS were cut in the U.S. and at least 12 more in Montreal, Canada.

"Microsoft and BGS are trying to frame these 35 cuts as an ‘entrepreneurial change in the scope of business,’ claiming they are transitioning from a ‘studio-based business model to a franchise-based model’ to dodge their legal obligation to bargain the decision with us," the union alleged. "We completely reject this corporate wordplay. Changing a title on a PowerPoint slide does not erase our legal right to a say in our working conditions."

As OneBGS applies pressure on Microsoft to negotiate how these layoffs will impact staff, work on games continues, even under difficult circumstances. A source familiar with Bethesda's restructure expressed confidence in BGS' continued ability to develop The Elder Scrolls 6 and insisted the studio's plans and ambitions for the highly anticipated RPG remained the same despite the layoffs.

Anything can—and usually does—change during game development, so it's impossible to say now if The Elder Scrolls 6 will suffer a delay. But as it stands, the game is said to be on track, even if that means it's two years away from release.

Bloomberg has reported that Fallout: New Vegas developer Obsidian Entertainment is now working on a new Fallout game, having also suffered from the Xbox layoffs. Bethesda is said to be supporting Obsidian on this Fallout game. It's a clear signal: Sharma wants Bethesda to deliver more Fallout more quickly.

A source familiar with the plans told IGN that several Fallout projects are in development across Bethesda and its partners, including Fallout 5. It feels premature to consider Fallout 5 now, but Bethesda development chief Todd Howard has spoken openly about it coming after The Elder Scrolls 6 and confirmed it will take into account the canon events of the Fallout TV series. The intention is very much for Fallout 5 to eventually be released.

The "live" Fallout project is Fallout 76, which IGN understands remains a significant operation with no changes to its development team's plans yet. A source said Fallout 76 still has hundreds of developers working on it and retains millions of players.

Meanwhile, Fallout Shelter is still alive and well. And of course, Amazon's Fallout TV show continues, with Season 3 filming now. The existence of a Fallout 3 remaster is an open secret at this point.

Sharma's new drive for collaboration across Xbox studios on its biggest franchises applies to Fallout, as expected, and the Obsidian Fallout game is part of that. There's a lot more Fallout coming from BGS too. The question is, how fast can new Fallout projects be turned around?

One game undoubtedly impacted by the Xbox layoffs is The Elder Scrolls Online, whose development roadmap was forced to change. It's unclear exactly how many staff directly working on ESO were cut, but there is justifiable concern about the fate of those who remain, as well as the game itself.

A source familiar with the situation told IGN that ZOS is supporting the new season model for ESO while also looking for ways to collaborate more closely with BGS to support the Elder Scrolls franchise as a whole, which sounds like helping get The Elder Scrolls 6 out the door.

Following the layoff announcement, fans were quick to point out that Starfield was absent from Bethesda's priority list. Starfield largely failed to meet fan expectations upon its 2023 launch, and subsequent updates and expansions haven't really moved the needle. Still, some hardcore fans hoped Starfield would at least get more expansions, and maybe a sequel, establishing itself as Bethesda's third franchise. Sources told IGN there are no changes to the current Starfield roadmap, and the team is still working on updates and content. A Nintendo Switch 2 version is reportedly in the works.

Microsoft has said Arkane Lyon studio management began a consultation with the Works Council in France to "review potential strategic options." Le Syndicat des Travailleureuses du Jeu Vidéo (STJV), the French independent video game workers union, told IGN it was waiting for an internal meeting between studio leadership and worker representatives to learn more.

The situation with Arkane Lyon, developer of Deathloop, could drag on, leaving staff facing an anxious wait. But the hope is the studio will eventually find a buyer, as Hellblade developer Ninja Theory and State of Decay developer Undead Labs have done, and that Blade will see the light of day.

IGN understands that prior to this week's layoffs, Blade was on track for a reveal early next year and a release in Q4 2027. IGN has asked Marvel Games for comment but has yet to receive a response.

Today, Doom developer id Software issued a statement responding to the layoffs, saying it was now at the staffing level it had when it made the beloved 2016 Doom reboot. It insisted it was still capable of making "great games" and pushed back on suggestions that essentially no one at the company is working on id Tech, the game engine used by id and fellow Bethesda-owned studio MachineGames. Xbox confirmed to IGN that "there are dozens of people working on id Tech across multiple locations" and that previous reports of only one person left in Texas are "inaccurate."

Here's the full statement posted to id Software's X/Twitter page:

While id Software currently has no announced project following Doom: The Dark Ages and its DLC, IGN understands the studio is prototyping several potential projects, with the belief it is still capable of building its own games. According to GamesBeat, id was formulating new game ideas, such as a John Wick-style original IP, a new Perfect Dark game, and a multiplayer/co-op Doom game, before the layoffs hit.

MachineGames was unaffected by this week's layoffs, with Wolfenstein 3 in the works. But as a European studio (based in Sweden), it may face cuts further down the line that would abide by local labor law, leaving staff looking over their shoulder even as they build a new shooter. A sequel to the well-received Indiana Jones and the Great Circle, however, remains uncertain, despite setting up another entry.

Xbox staff have endured a bloodbath this week. By Asha Sharma's admission, it is "the most significant restructure in Xbox history." Microsoft's gaming business faces profound questions it must answer over the next few years, not just on its ability to grow profit, as Sharma has said Xbox must, but on its ability to make hit games and grow Game Pass. Some speculate that Microsoft could sell Xbox off, spin it off as a wholly-owned subsidiary, partner with another company to run it as a joint venture, or sell parts of the business to the highest bidders. Then there's the hardware "crisis," which could see the next-gen Xbox, codenamed Project Helix, cost over $1,000.

Could The Elder Scrolls 6 launch alongside it?