ZeniMax Online Studios and Bethesda Softworks are facing a major organizational pivot following a wave of job cuts across Xbox. On Monday, Xbox announced it would lay off 1,600 employees, with a total of 3,200 cuts expected by the end of the fiscal year. As part of this overhaul, the company is divesting from four studios.
The impact on the The Elder Scrolls Online team has been severe. According to recent reports, the studio has been "seemingly gutted," with estimates suggesting that as much as half of the development staff has been let go. The game's community manager addressed the situation in a post on the official forums, confirming that the future of ESO will shift following the launch of Season One on July 8.
"We want to take the time to evaluate the work in front of us and then lock down an updated schedule," the statement read. "While we'd love to share concrete details today, stepping back to get our plans straight will let us come back to you with a clear timeline."
A Shift in Bethesda’s Strategic Focus
The layoffs are forcing a change in how Bethesda operates. In an internal email obtained by IGN, Bethesda head Jill Braff stated that the company is moving away from a model of largely independent studios. Instead, the organization will focus on its strongest franchises: The Elder Scrolls, Fallout, Doom, Quake, and Wolfenstein.
"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 and determining the content roadmap that best serves our players and Bethesda as a whole," Braff wrote. "From there, we’ll align the right talent, technology, and resources across the organization to deliver on those priorities."
Uncertainty for Other Bethesda Titles
The pivot appears to leave little room for other projects. Notably, Starfield—which launched in 2023—was absent from the list of priorities mentioned by company leadership. While the game saw over 15 million players in its first year via Xbox Game Pass, its release on PlayStation in April 2026 saw a muted reception.
Meanwhile, the status of The Elder Scrolls 6 remains largely unchanged. In June, Xbox chief content officer Matt Booty noted that the game is "coming along well," though it remains years away from a full reveal. As the organization reconciles with these significant staff reductions, the broader impact on the development of these major franchises remains the primary concern for the player base.