Microsoft has initiated what it describes as "the most significant restructure in Xbox history," leading to the immediate layoff of 1,600 employees. An additional 1,600 jobs are slated for cuts within the current financial year. This widespread reduction also affects four studios, with one potentially facing sale or closure if a buyer is not secured.
The restructuring impacts multiple studios and game development pipelines. Arkane, a French studio, is beginning consultations with its Works Council regarding potential strategic options for the studio, adhering to local labor laws. This process casts uncertainty over the future of Marvel's Blade, which was in development at Arkane Lyon. Questions remain about the game's release status, potential cancellation, or if another company might acquire the project and continue development.
ZeniMax, encompassing studios like Bethesda, id Software, and MachineGames, will also experience cuts. While Bethesda continues work on The Elder Scrolls VI and is expected to focus on new Fallout titles, ZeniMax studios will also be involved with Doom and Quake (id Software) and Wolfenstein (MachineGames). Notably, there is no mention of Indiana Jones, suggesting MachineGames may not develop a sequel to Indiana Jones and the Great Circle.
Double Fine and Compulsion Games have confirmed their status as independent studios following the announcement. The future of titles such as Psychonauts and South of Midnight, developed by these studios, is being discussed.
Undead Labs, the developer of State of Decay 3, is reportedly being sold with funding to complete and grow the game, indicating its eventual release. However, the identity of the acquiring entity and any potential layoffs within the studio remain unknown. State of Decay 3 was recently featured at the Xbox Games Showcase with a trailer indicating a 2027 release window.
An accompanying opinion piece questions the efficacy of such drastic talent attrition as a solution for Xbox's perceived unhealthiness, suggesting that jettisoning studios could diminish creative avenues as Microsoft appears to concentrate on established "mega franchises."