Xbox Workers Stunned After Jobs ‘Bloodbath’

Employees across Xbox-owned studios have been left reeling after Microsoft announced one of the biggest rounds of layoffs in the company’s gaming division, with many workers saying they were blindsided despite weeks of speculation.

Morgan Goin, a senior encounter designer at Xbox-owned ZeniMax Online Studios (ZOS), said staff knew cuts were coming but had no idea how extensive they would be.

“We knew something was going to happen to somebody, but not who or how much.”

The layoffs followed weeks of reports predicting a “bloodbath” after Xbox’s new chief executive, Asha Sharma, circulated a memo outlining plans to “reset the business.”

About a month later, employees learned that roughly 3,200 workers – around 20% of Xbox’s workforce – would lose their jobs. Half of the layoffs took immediate effect, while the remaining 1,600 are expected to happen over the next year.

Xbox Shifts Focus to Blockbuster Franchises

Xbox leadership has described the cuts as “painful” but necessary, saying the restructuring will allow the company to focus more resources on its biggest gaming franchises and deliver new releases faster.

Former employees, however, argue that the layoffs have stripped the company of decades of institutional knowledge and question whether the strategy will ultimately strengthen Xbox.

Gaming Industry Continues to Shed Jobs

The latest cuts are part of a wider trend that has affected the global video game industry since 2022, with an estimated 58,000 jobs lost worldwide.

Much of the downturn has been linked to rapid hiring during the COVID-19 gaming boom, when player numbers and spending surged dramatically.

During that period, Microsoft aggressively expanded its gaming portfolio through acquisitions, including ZeniMax/Bethesda – home to The Elder Scrolls and Fallout – and Activision Blizzard, which it acquired for $69 billion in 2023.

Although gaming remains profitable, soaring development costs, inflation, changing consumer habits and rising hardware expenses linked to AI investments have all put pressure on publishers.

Weeks of Silence Before Layoffs

When Sharma’s memo was circulated in early June, many employees began worrying about what it could mean for their future.

Autumn Mitchell, a former senior quality assurance tester at ZeniMax, recalled the uncertainty.

“People are reading in between the lines.”

“Does it mean me? Does it mean them? Does it mean my project? Does it mean my studio?”

Mitchell is one of four Xbox developers who spoke to the BBC after losing their jobs.

All four belong to unions affiliated with the Communications Workers of America (CWA).

According to the former employees, repeated requests for clarification from management were met with little response.

“What we were left with was just a lot of uncertainty for about a month,” said Goin, who also serves on ZOS’ bargaining committee.

Studios Shocked by Scale of Cuts

Simon Prefontaine, a game designer at Bethesda Game Studios’ Montreal office, said staff believed they were relatively safe because they worked on flagship franchises.

“We’re expecting maybe a few of us might get hit, we’re probably pretty safe.”

“We did not expect the scale of layoffs that we have here.”

“We’re stunned.”

Doom Studio Loses Experienced Talent

Andrew Willis, a former producer at id Software, said the layoffs came just one day before the release of Revelations, a major expansion for Doom: The Dark Ages.

He claimed many employees had worked between 12 and 17 hours a day over several months to complete the project.

Willis believed those efforts would shield the studio from major layoffs.

“I did not think that they would cut the studio in half.”

He also alleged that many of those dismissed were technical experts responsible for the studio’s proprietary id Tech engine, describing the software as a cornerstone of the gaming industry.

“They basically just threw it into the trash can at this point.”

The studio has disputed suggestions that its technical capabilities have been severely weakened, insisting it still has “the crew to build the games and tech we’re known for.”

Microsoft also told the BBC that reports suggesting id Software’s Texas operations had been largely dismantled were inaccurate, adding that dozens of employees continue working on id Tech across multiple locations.

Elder Scrolls Online Faces Content Slowdown

At ZeniMax Online Studios, Goin estimates some departments have been reduced to just a quarter of their previous size.

She believes that will inevitably affect future updates for The Elder Scrolls Online.

“We’re not going to be able to put out the amount of content at the speed that we were… or anything approaching that.”

The studio has already acknowledged that previously announced content roadmaps will need to change while it reassesses future plans.

Strategy Moves Away From Game Pass

An internal email from Bethesda executive Jill Braff, verified by the BBC, indicated that the publisher would prioritise its strongest franchises in line with Xbox’s new direction.

The move represents a shift away from former Xbox chief Phil Spencer’s strategy of expanding Game Pass through a wide variety of releases.

Reports suggest the subscription service failed to meet Microsoft’s customer growth expectations, while Sharma has reportedly argued that trying to support too many projects left Xbox “over-extended.”

Analysts Divided on Xbox’s New Direction

Jez Corden, executive editor of Windows Central, said many fans have long complained about the slow arrival of sequels to Xbox’s biggest franchises.

While some supporters believe Sharma can deliver long-term improvements, he said broader scepticism remains.

Industry veteran Fernando Rizo, co-host of the Business of Video Games podcast, described the layoffs as “brutal” and “awful” but argued there are legitimate concerns about lengthy development timelines.

He pointed to The Elder Scrolls VI, which has reportedly been in development for around a decade.

“There is value in having deadlines.”

“There is value in having edges of the box you can’t go past.”

Unions Push for Better Support

With another 1,600 layoffs still expected over the coming year, many remaining employees fear further uncertainty.

“Those who remain know that one day they will be on the chopping block,” said Prefontaine.

CWA-affiliated unions representing Xbox workers plan to stage rallies outside six Microsoft locations while pursuing “effects bargaining” – a process that covers severance packages, redeployment opportunities and potential reinstatement of affected workers.

Goin said the unions hope to provide support during what many employees are experiencing as the most difficult period of their careers.

Having worked in the gaming industry for 11 years and lived through three rounds of layoffs, she believes long-term careers should not be a rarity.

“I should not be the exception.”

“I would like for people to have lifelong careers that are sustainable, and I want to experience the art made by those folks.”