Recent weeks have seen significant turmoil within Xbox, marked by widespread layoffs impacting studios such as Compulsion Games, Double Fine, and Ninja Theory, which are reportedly being spun off. Reports also indicate that third-party contracts have been cut, unions are negotiating layoff protections, and projects like IO Interactive's Project Fantasy have been canceled, leading to further job losses. Arkane Studios is also reportedly in consultation regarding its staff.
Amidst this restructuring, which has caused considerable fear and uncertainty among employees and confusion within the gaming community, Xbox has faced criticism for its public relations approach. A notable instance occurred on June 22, when an Entertainment Weekly article published details of an interview with Asha Sharma and Matt Booty. The piece, timed with Xbox's 25th anniversary, focused on positive developments like a Game Pass price drop and console exclusivity for Gears of War: E-Day and Clockwork Revolution. Sharma's statement regarding the layoffs, described as "direct and matter-of-fact," noted that "Technology companies are going through this... and certainly gaming is not immune to it." The article also highlighted Xbox's ambitions in Hollywood adaptations, the success of Minecraft and Call of Duty, and Hideo Kojima's upcoming exclusive title, OD. Later, on June 30, a report emerged suggesting OD was safe from the restructuring plans, a move seen by some as an attempt to divert attention from the internal turmoil.
This pattern of highlighting new projects to offset negative news has continued. Following reports that approximately 96 individuals were cut from id Software's Richardson office, alongside remote staff and cuts in id Frankfurt, raising questions about the future of id Tech, Xbox issued a statement. The studio asserted it retains the necessary staff to continue its work, comparing its current size to that during the development of Doom (2016). Creative director Hugo Martin further commented that the success of their games benefits everyone, including those who were laid off.
Similarly, The Elder Scrolls Online team reportedly experienced significant staff reductions, including key leadership, following major layoffs last year. An associate design director and community management director stated the team is now at a size comparable to when acclaimed DLCs like Wrothgar and Summerset were developed, implying that roles added over the past decade were unnecessary.
Further reports detail extensive devastation across Bethesda. Developers working on The Elder Scrolls VI have expressed concerns about potential delays due to the cuts. Bethesda HR reportedly instructed staff to remove an in-office memorial for laid-off colleagues. The Bethesda Game Studios union has stated that 440 union roles were eliminated across Zenimax and Bethesda's organized workers, leading to protests and unfair labor practice charges against Xbox for its alleged mishandling of the situation.
In response to the negative publicity surrounding these developments, Todd Howard has been featured in statements that do not address the significant loss of talent and experience but instead focus on upcoming games such as The Elder Scrolls VI, Fallout 5, remasters of Fallout 3 and New Vegas, a new Fallout from Obsidian, Starfield updates, a Fallout 76 expansion, and a Fallout Shelter reality show. The author of the report suggests this strategy of promoting major intellectual properties aims to distract from the impact of the layoffs and poor decision-making, concluding that the focus remains on the games themselves, regardless of the human cost.