Following the massive $69 billion acquisition of Activision-Blizzard-King, Xbox is undergoing a significant corporate reset. New Xbox CEO Asha Sharma has announced a total of 3,200 layoffs, with 1,600 staff members affected immediately. The restructuring includes the departure of four studios—Double Fine, Compulsion, Undead Labs, and Ninja Theory—which will operate as independent entities or under new management. A fifth studio, Arkane, remains in a state of flux while Microsoft navigates French labor laws.
A New Focus on Core Franchises
In a memo to staff, Sharma stated, “We have also learned that we are not the best home for every type of studio.” This sentiment was echoed by Bethesda boss Jill Braff, who informed her team that the company must move away from a model centered on independent studio planning to one focused on their strongest franchises.
Moving forward, Xbox is prioritizing its most recognizable intellectual properties: Halo, Fallout, and The Elder Scrolls. The shift is intended to accelerate development on these key titles, which have seen significant gaps between releases. For example, it has been over a decade since the last mainline, single-player entries for both Fallout and The Elder Scrolls.
The Future of Halo and Bethesda RPGs
The roadmap for these franchises involves reevaluating how development is handled. For Halo, the path forward involves Halo Studios’ transition to Unreal Engine 5. The upcoming Halo: Campaign Evolved, marking the series' 25th anniversary, will be the studio's first title on the engine and will also see a release on PlayStation consoles, though it will not include multiplayer.
To address the development speed of its major RPGs, Xbox is looking toward a collaborative model similar to the production of Call of Duty. By utilizing a “development circle” consisting of Bethesda Game Studios, Obsidian Entertainment, and inXile Entertainment, Xbox aims to produce major Fallout and Elder Scrolls titles more frequently. Reports indicate this is already in motion: Obsidian has reportedly canceled Avowed 2 to prioritize a new Fallout project, with Fallout: New Vegas director Josh Sawyer stepping away from his current project to lead the effort.
Impact on Studio Talent
The transition has not come without heavy costs. Beyond the total headcount reduction of 3,200, id Software was notably impacted, with reports suggesting more than half of the studio’s staff were laid off. While the company shifts its resources toward its biggest IPs, the move signals a departure from the previous strategy of supporting a wider array of projects and smaller, independent titles.