Bethesda and The Elder Scrolls Online team face significant layoffs at Xbox.

On Monday, Xbox revealed plans to lay off 1,600 employees, with a total of 3,200 expected to be let go by the end of the fiscal year. The company is also divesting from four studios, while the future of Arkane Studios, known for the Dishonored series, remains uncertain.

The layoffs have significantly impacted ZeniMax Media and its subsidiary Bethesda Softworks. Although studios like Id Software and ZeniMax Online Studios are still operational, they are reportedly experiencing substantial staff reductions.

ZeniMax Online Studios, the team behind The Elder Scrolls Online, has been described as “seemingly gutted,” with reports suggesting that up to half of the team may be affected. The community manager for ESO mentioned in the forums that the game’s future will be “shifting” after the launch of Season One on July 8. They emphasized the need to evaluate their plans before providing a clearer timeline.

Id Software is set to release the next Doom expansion, Revelations, on Tuesday. However, the path forward for the studio remains unclear in light of the layoffs.

According to reports, ZeniMax will now concentrate on its most prominent franchises: Doom, The Elder Scrolls, Fallout, Quake, and Wolfenstein. Bethesda is also expected to alter its approach to future projects. In an internal email, Bethesda head Jill Braff indicated that the company would “meaningfully evolve how we operate.” She noted that Bethesda has traditionally organized its business around the independent roadmaps of its development studios, supported by centralized publishing and corporate teams.

Braff mentioned a shift from a planning model focused on individual studios to one that prioritizes the strongest franchises and a content roadmap that serves both players and Bethesda as a whole. This means aligning talent, technology, and resources across the organization to meet these new priorities.

While the specifics are still unclear, it seems Xbox has a clearer vision for its future direction.

Notably absent from discussions about Bethesda’s priorities was Starfield. The space RPG, which launched in 2023 to mixed reviews, still attracted over 15 million players in its first year, largely due to its availability on Xbox Game Pass. It was released on PlayStation in April 2026 but failed to make a significant impact.

Although more Starfield content isn’t on the horizon, Xbox is looking for more Elder Scrolls and Fallout titles. The Elder Scrolls 6 has been in development for quite some time and appears to be years away from release. In June, Xbox chief content officer Matt Booty provided a brief update, stating that the game is progressing well and that an official announcement will come at the right time.

It’s been a challenging period for Team Green.