Xbox layoffs: Jobs lost at Obsidian, Bethesda, Id and Zenimax Online Studios

Update, July 9, 2026: A WARN notice filed in Maryland states that 213 employees were laid off from ZeniMax Online Studios, including 166 at ZeniMax Media.

Another WARN notice in California (per Game File) confirmed that 52 Obsidian employees were laid off, including 43 at the California office and nine in-state remote workers.

Update: July 8, 6.30pm UK: Kevin LaChapelle, the vice president of Xbox platform who led the effort to build Xbox's backward compatibility program and its cloud gaming team, has been laid off after 37 years with the company.

In a statement posted to LinkedIn (thanks, VGC), LaChapelle wrote: "I have worked in many different parts of the company, and I will say my fondest memories are of leading the team of very talented engineers who built the Xbox Backward Compatibility program.

"Sitting in the auditorium when Phil announced the program at E3 2015 was incredible. The audience's reaction was unbelievable."

LaChapelle continued: "I am a firm believer that all entertainment will eventually become streamed to you wherever you are. I look forward to watching how Xbox evolves going forward and I wish the team nothing but success."

Update, July 8, 2026: A WARN notice filed in Texas has confirmed 136 developers were laid off from id Software, and another 22 were ousted from Bethesda Game Studios in Austin, making a total of 158 positions.

As noted by Game Developer's Chris Kerr, "the overwhelming majority" of those laid off were CWA union members: 146, to be exact.

Correspondence submitted to the Texas Workforce Commission reveals the redundancies affected almost all parts of the studios' business, with QA most significantly impacted with 26 positions cut.

Update, July 7, 2026: Reports suggest that Obsidian has lost between 60 to 70 workers. One source told Kotaku that employees remaining at the studio "have not yet received formal guidance" on how existing projects will proceed following the cuts.

Elsewhere, 3D Realms founder Scott Miller claimed that "most (if not all) coders" have been let go from Id Software. Former Bethesda Game Studios project lead Jeff Gardiner suggested 95 developers had been lost at the studio overall.

Update, July 6, 10pm UK: Posts on BlueSky and Linkedin indicated layoffs taking place at Obsidian, developer of The Outer Worlds and Pentiment. Those impacted include Daniel Alpert, an Art Director who'd been with the company for 21 years, and writer AK Fedeau.

Other posts on LinkedIn support previous Kotaku reporting of widespread layoffs at Zenimax Online Studios, including those focused on UX and usability, along with other roles lost at Id Software and Call of Duty developer Sledgehammer Games.

As PC Gamer points out, Obsidian is obliged to provide advance notice of layoffs if more than 50 employees are impacted. However, there is no reference to Obsidian on the California WARN Act Tracker at the time of writing, suggesting the cuts fall short of that threshold.

Update, July 6, 6pm UK: a report in Kotaku describes "brutal" cuts at Zenimax Online Studios, which operates Elder Scrolls Online, suggesting that up to half the development team could be impacted. A post on the game's forums stated that the studio was committed to the game, but “the roadmaps we previously shared will be shifting.”

Original story, July 6, 2026: Details have emerged on the sweeping job cuts announced today by Xbox CEO Asha Sharma, with workers reporting job losses within the firm's studios and publishing teams.

The loss of 3,200 staff, around 20% of the organisation, was announced this morning via an internal memo that was also posted to X. Sharma confirmed that five studios were to be divested, with Double Fine and Compulsion Games becoming independent and Ninja Theory and Undead Labs in the process of being acquired. Arkane Lyon has entered a consultation process in line with French employment law.

Subsequently, job losses have been confirmed at Bethesda by staff posting to LinkedIn. Those affected include Piers Duplock, a producer at its Montreal studio, Jean Paul Salman, a systems designer in Austin working on Fallout 76, and Jessica Clark, a community manager in its Maryland home base.

Bloomberg reporter Jason Schreier said in a Bluesky post that Zenimax Online Studios and Id Software were also cutting "a significant number of staff".

The layoffs follow the company's first ever round of voluntary redundancies, most of which took effect last week. The cuts are timed to coincide with the beginning of Microsoft's financial year, meaning that today's news arrives almost exactly a year after cutbacks closed The Initative and cancelled projects at Rare and Blizzard.

This is a developing story and will be updated.