A new report based on testimonies of people affected by Microsoft’s recent cuts to the Xbox division has painted a picture of secrecy, disarray and anger, and of a company left reeling as further layoffs loom.
Microsoft announced its Xbox restructuring last week, immediately laying off 1,600 people and slating a further 1,600 to be cut sometime between now and next summer. But no one yet knows who those jobs will belong to, meaning staff are working in fear of what might come.
“I don’t know how anyone remaining at Xbox Studios can feel safe knowing another 1,600 cuts are coming,” one source affected by the layoffs told Game Developer. “And even then, what happens after June 2027? Will we get layoffs in July for the third year in a row?”
Game Developer’s report said staff were kept in the dark about the restructuring “for weeks” after Bloomberg’s initial report said layoffs were on their way. “Higher ups didn’t know or did not say,” one person said. “It was left to all of us to speculate and spiral and worry.”
When the announcements did finally come, staff were gathered for brief one-way video calls and were unable to ask questions in response, which isn’t uncommon when addressing large teams about serious issues like this. However, at id Software specifically, staff affected by layoffs were only told 10 minutes before a meeting was called to announce them, meaning some people didn’t make it, and then their Slack and email access were immediately revoked, leaving them unable to be contacted.
What capacity id Software has to make its own games and maintain proprietary engine id Tech, after losing 136 staff, is unclear. Id insists it still has “the crew we need to build the games and tech we’re known for”, but a source in this report said: “They’ve just gotten rid of all the people who could ever fix, maintain, or change [id Tech], so it’s most likely going to end up in the in the trash can.” 90 percent of the team responsible for overseeing AI (not generative AI) and gameplay has been laid off, this source added. Even veteran “employee number 13”, who’d worked with founding id Software icons John Carmack and John Romero, has been let go.
It’s an especially cruel blow for id Software on the week it should have been celebrating the release of Doom: The Dark Ages expansion Revelation, but the cuts aren’t exclusive to it – they reach all across Bethesda and Zenimax Media. Even Bethesda Game Studios, developer of The Elder Scrolls and Fallout series, has been affected. “Bethesda Game Studios lost a lot of talent this week,” a source said. “Xbox says they want to focus on their core franchises like Fallout and Elder Scrolls but that’s going to be harder than ever now.”
It’s led to concern that Xbox has wiped out people with years and years of expertise and experience: qualities that are nearly impossible to replace and rehire. “The institutional knowledge that has been lost or will be lost completely as individuals leave the gaming industry altogether is staggering,” one person said. “Those that are left must be scrambling to pick up the pieces.”
Microsoft shed four – probably – five Xbox studios as part of the restructuring: Double Fine, Compulsion, Ninja Theory, Undead Labs and Arkane, a studio that’s currently negotiating an exit. Its plan is – as one source mentioned – to refocus around its biggest IP. But the big problem is that Microsoft now owns so many franchises, and so many studios – by virtue of buying Bethesda and Activision Blizzard in unprecedented deals – that it’s got too much to focus on. Xbox has a choice, former PlayStation leader Shawn Layden recently told me: does it want to be a publisher or a platform holder? It can’t be both.
