Microsoft's Xbox division is executing the largest restructure in its history, cutting approximately 20% of its workforce across the fiscal year while closing five studios entirely. The layoffs extend to id Software and ZeniMax Online Studios, both owned by Microsoft through the ZeniMax Media acquisition, though neither studio faces closure. Both will lose significant portions of their staff.
Xbox boss Asha Sharma framed the restructuring as necessary to refocus resources on larger franchises and core business priorities. The move represents a dramatic shift in Microsoft's gaming strategy following the 2021 acquisition of ZeniMax Media for nearly 8 billion dollars.
Id Software, legendary for the Doom and Quake franchises, will see reduced headcount despite maintaining operations. The studio remains central to Microsoft's first-person shooter portfolio, particularly with future Doom titles in development. ZeniMax Online Studios, known for The Elder Scrolls Online, faces similar cuts despite operating a successful live-service MMO that generates consistent revenue.
The broader layoff wave hits multiple Microsoft Game Pass studios. Five studios face complete closure, signaling that Microsoft will concentrate investment on franchises with proven commercial performance and existing player bases rather than experimental projects or smaller properties. This approach prioritizes AAA live-service titles and established IP over mid-tier releases.
The timing intensifies pressure on Microsoft's gaming division following years of acquisition spending without proportional revenue growth. Game Pass subscriber numbers have plateaued, and Microsoft faces competition from PlayStation and Nintendo while managing expectations around upcoming releases like Starfield expansions and future Bethesda titles.
For id Software and ZeniMax Online, the cuts likely mean delayed project timelines and reduced ambition on secondary releases. Id Software's next major Doom installment faces potential delays, while ZeniMax Online must maintain The Elder Scrolls Online's live operations with fewer resources. Both studios retain their core franchises