Yesterday, XBOX CEO Asha Sharma revealed the company’s plans for restructuring following her announcement earlier this year and the past few weeks’ reports regarding possible studio closures, revealing that 3,200 employees will be laid off throughout FY27, 1,600 of which already happened. Now, it’s been revealed that both Obsidian and ID Software have been impacted. According to those familar with the situation, Obsidian has lost around 25 percent of its staff, Zenimax Online Studios will have to change its plans for The Elder Scrolls Online, while ID Software has reportedly lost most, if not all, of its coders.
“Most, if not all,” of Id Software’s coders, 60-70 Obsidian developers, and more veteran developers have reportedly been laid off from Microsoft as the scale of this week’s big Xbox cuts becomes clearer.https://t.co/qLVj7Njvag pic.twitter.com/1vP90Z7huv
— VGC (@VGC_News) July 7, 2026
Sources with knowledge of the matter say that around 60-70 developers were cut at Obsidian. This included employees from all sort of different disciplines such as producers, artists, designers, programmers, QA testers, writers, and others who have worked across Obsidian’s recent releases. Most of these roles were eliminated as part of the first 1,600 employees who were already laid off. A few were told that they would be let go later this year as part of a second wave of cuts. One employee told Kotaku that those who remain at the studio have not yet received formal guidance on how their existing projects can continue with so many staff members missing, particularly given what they characterized as a “huge list of projects” in the works at the studio in the coming months.
Work on Grounded 2 and the DLC for The Outer Worlds 2 is expected to continue. Plans beyond these are still up in the air.
This post was about the insider news I got this morning that a majority of Id’s studio is being laid off, including most (if not all) coders. https://t.co/OcPrLgvYBG
— Scott Miller – Apogee/3D Realms Founder ☢️ (@ScottApogee) July 6, 2026
The ID cuts come from Microsoft’s plans for Bethesda to focus on the company’s strongest franchises. 3D Realms founder Scott Miller took to social media revealing the news. Former project lead Jeff Gardiner shared that he heard 95 employees were laid off.
Just heard 95 at id.
— Jeff Gardiner 🎮 (@jg93) July 6, 2026
Earlier this year, Zenimax Online Studios released its roadmap for 2026 but the layoffs have impacted the studio as well as its plans for 2026. The ESO team released this statement to the community:
“As we get ready to launch Season One this week, we wanted to reaffirm our commitment to The Elder Scrolls Online.
Our team’s immediate focus is on launching Season One, which we’re all excited for you to jump in.
Looking beyond Season One, the roadmaps we previously shared will be shifting. We want to take the time to evaluate the work in front of us and then lock down an updated schedule. While we’d love to share a concrete details today, stepping back to get our plans straight will let us come back to you with a clear timeline.
This game is nothing without you, our community. Thank you for sticking with us, and for everything you bring to Tamriel.”