Former Bethesda developers say that Xbox's recent layoffs have resulted in a significant loss of personnel and knowledge that could affect the future development of Fallout and The Elder Scrolls. Xbox has recently hit the "reset" button on the business, reorganizing and restructuring its operations to reflect changing industry conditions.

Since the beginning of the summer, Xbox has been significantly changing its operations as new CEO Asha Sharma continues her next 100 days. On July 6, 2026, Sharma published a letter to Team Xbox employees stating that the company would see roughly 3,200 layoffs as part of a broader organizational reset. Renowned studios like Bethesda Game Studios, ZeniMax Online Studios, and id Software suffered staff reductions, while other smaller studios were sold off entirely. Although Xbox executives have stated that the company is refocusing its resources on its largest franchises, developers are now going on record to voice concerns that these cuts will drastically impact games like Fallout and The Elder Scrolls.

Former Devs Explain Why Xbox Layoffs Could Have Lasting Effects on Bethesda's Biggest RPGs

Anonymous developers working under the ZeniMax Media umbrella, either currently or formerly, have spoken to Game Developer about the recent Xbox exodus, describing the loss of "institutional knowledge" within these teams as "staggering" and arguing that rebuilding that expertise could take years. These affected team members have stated that cutting so many staff members is not just cruel but also self-defeating, as Bethesda and Obsidian are now "scrambling to pick up the pieces" in the absence of developers who were pillars of those studios' workflows. As a result, the remaining teams may struggle to maintain previous production schedules for games like The Elder Scrolls or the proposed Fallout game at Obsidian.

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While it's still too early to tell what will happen as a result of these layoffs, current and former developers certainly feel it will affect Bethesda's current and future portfolio. With The Elder Scrolls 6 still a ways off, many of the remaining team members have expressed concern about the long-term development of the upcoming fantasy RPG at its proposed scale, given the smaller team. Some former staff have also questioned whether Fallout 76 can continue to deliver updates at a regular cadence without the additional support. As of now, Bethesda union members have started organizing public demonstrations, calling for stronger protections following the recent wave of cuts.

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Far more than just a reduction in staffing, the loss of institutional knowledge could be a major factor in the quality of upcoming Fallout and The Elder Scrolls releases. Decades-long RPG series rely heavily on experienced developers who understand how to use a studio's proprietary tools, quest design philosophy, world building, engine workflows, and franchise lore to efficiently create games. While in the future, Xbox could perhaps replace the missing members of Bethesda staff, that won't necessarily fill the gap of years of accumulated experience that's now gone. Particularly for games that take five to eight years to develop. Fans should be aware, however, that the concerns expressed by former developers represent informed opinions rather than confirmation that these games will actually suffer.

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Moreover, large studios such as Bethesda and Obsidian have weathered significant staffing changes in the past and still produced interesting projects after the fact. Xbox remains committed to Fallout and The Elder Scrolls as cornerstone franchises in its portfolio, so these games will surely continue to receive ample investment despite the recent restructuring, and fans won't have to worry about them going anywhere any time soon. However, the true impact of these Xbox layoffs won't be clear for several years, when the next entries in these massive franchises finally reach players. Until then, comments from former and current developers may offer only a glimpse of what the remaining staff now face under a new Xbox Game Studios.