On July 6, Asha Sharma, the CEO of Xbox, sent an email to employees worldwide detailing a major restructuring within Microsoft’s gaming division. Titled “Resetting Xbox,” the message disclosed plans to eliminate 3,200 positions by the end of the financial year in 2027, with 1,600 layoffs taking immediate effect.
Shortly thereafter, Teams meeting invitations began circulating throughout various studios. Anne Barrett, a former employee of Bethesda Game Studios in Austin, recounted her experience: “We joined a virtual call with our studio manager, but our cameras and microphones were disabled. We received the news abruptly, along with a notification that we would soon lose access to our Slack channel. It was a chaotic moment filled with farewell messages before everything went silent.”
This pattern appeared to be standard across North American studios: a brief Teams call with studio leadership delivering a prepared statement, followed by a warning about impending Slack access termination. Morgan Goin, from ZeniMax Online Studios, noted, “Being a remote studio, Slack was our primary communication tool. Throughout the morning, colleagues exchanged goodbye messages, sharing contact details and expressing how much they would miss each other.” Then, silence enveloped the teams.
Both Bethesda Game Studios and ZeniMax Online Studios formed unions in 2024, and Barrett and Goin are actively involved in negotiations with Microsoft. Under the Worker Adjustment and Retraining Notification (WARN) Act in the U.S., companies with more than 100 employees must provide 60 days’ notice before significant layoffs. As a result, affected employees in the U.S. will continue to receive pay until September 4. Union representatives are currently engaging with Microsoft to negotiate severance packages and seek to re-employ some of those impacted. Rallies are being organized outside studio locations across North America, with the Bethesda union appealing for support from gamers via social media platforms.
Employees had been hearing rumors of impending layoffs for weeks and were already alerted by a Bloomberg article on June 10 regarding potential job cuts. Barrett expressed the anxiety felt by many: “There was an ominous atmosphere. We thought we were secure because of our ongoing projects like Skyrim and Fallout, but we were brought into a two-minute meeting that abruptly ended long careers. It was devastating.”
Barrett also reflected on her disbelief during the day of the announcement, stating, “I laughed all day because it didn’t seem real. Some colleagues were visibly upset, breaking down and struggling to comprehend the situation. The full impact hit me the following day, realizing I had dedicated seven years to this company, a dream come true, now suddenly vanished.”
This human toll often goes unnoticed amidst reports of mass layoffs. Goin shared her struggles, saying, “I’m exhausted, my sleep patterns are disrupted, and I often forget to take care of myself. It feels like I’m grieving.”
Simon Préfontaine, a former designer at Bethesda Game Studios Montreal and a single father, echoed these sentiments. He expressed concern over his future without a job or health insurance, saying, “It’s incredibly stressful. I know others who have been unemployed for over a year. It’s not just about financial stability; I’ve experienced what feels like the stages of grief. You build relationships over years, and suddenly, they’re gone.”
Employees were also perplexed by the apparent randomness of the layoffs, with no clear criteria for who was let go. Alex Nguyen, a union negotiator still working at Bethesda Games Studios Dallas, highlighted the inconsistency: “On my character art team, we lost two long-term employees who were passionate and excellent at their jobs. It made no sense.”
As a consequence of these layoffs, there will likely be effects on the development of upcoming games, including possible delays and project cancellations. Id Software, known for franchises like Doom and Quake, saw 136 employees laid off, representing a significant portion of its workforce. VFX artist Derek Best indicated in a LinkedIn post that the studio had been reduced to “support studio size.”
Barrett expressed similar concerns for Bethesda, noting that while the layoffs were less extensive, key personnel had been impacted. “I’m unsure how we can maintain the high quality of our games…”
