Bethesda is undergoing a significant restructuring as part of a wider series of job cuts across Microsoft’s gaming division. Xbox CEO Asha Sharma announced that 3,200 staff are set to lose their jobs throughout the current financial year, with 1,600 employees impacted as of July 6. Describing the move as the most significant restructure in Xbox history, Sharma noted that the company’s gaming business is currently "not healthy."
Bethesda has been hit hard by these cuts, with staff across multiple studios facing layoffs or uncertain futures. In an internal email, Bethesda boss Jill Braff confirmed that the company is "changing course" to operate from a more stable foundation. Braff cited rising player expectations, increasing development complexity, and a competitive market as factors that have fundamentally changed the industry's economics.
A Shift Toward 'Strongest Franchises'
The most notable change for the publisher is a move away from its traditional operating model. For decades, Bethesda allowed its independent development studios to manage their own specific project roadmaps. Moving forward, the company will instead prioritize its "strongest franchises" and develop a centralized content roadmap that serves the organization as a whole.
"We are shifting from a planning model primarily centered on what's next for each independent studio to one that focuses on our strongest franchises," Braff wrote to staff. "From there, we’ll align the right talent, technology, and resources across the organization to deliver on those priorities."
Impact on Studios and Upcoming Projects
The restructuring has cast doubt on several ongoing and future projects. Reports indicate that id Software has suffered significant cuts, leaving the studio potentially tasked with supporting other teams on first-person shooter development for titles like Wolfenstein 3—which is currently in development at MachineGames—and potentially future Fallout content.
The future of other titles remains less certain. Microsoft is reportedly planning to sell or close Arkane Lyon, putting the status of Marvel’s Blade into question. Meanwhile, Indiana Jones and the Great Circle appears unlikely to receive a sequel. While Bethesda Game Studios continues work on The Elder Scrolls 6, the focus on "strongest franchises" has led to speculation that the timeline for Fallout 5 could be accelerated, or that Obsidian Entertainment—which is currently without a confirmed new project following the performance of Avowed and The Outer Worlds 2—could be brought in to lead a new entry in the series.
Braff’s message to employees emphasized that while the operating model is changing, the focus remains on "meaningful long-term potential" for the company's established intellectual property. The publisher intends to share more regarding this new direction in the coming months.