Microsoft's gaming division has cut deeply into Bethesda and id Software, the studios it acquired for $7.5 billion in 2020. Some teams face reductions of up to 50 percent, according to reports. Additional layoffs remain possible.
The cuts target multiple studios under the Bethesda umbrella. id Software, the legendary developer behind Doom and Quake, faces particularly severe reductions. The layoffs follow a broader restructuring Microsoft announced in October 2024, when the company eliminated nearly 2,900 jobs across the organization.
For Bethesda, the timing complicates ongoing development efforts. The studio has Elder Scrolls VI in early production, a project that won't ship for years. Starfield, the 2023 exclusive that failed to meet commercial expectations, appears to have triggered executive reassessment of the division's output and trajectory. The game received mixed reviews and underperformed against Microsoft's projections.
id Software remains active on Doom: The Dark Ages, a sequel launching in 2025. Whether the layoffs impact that release remains unclear.
The cuts raise questions about Microsoft's long-term commitment to traditional triple-A game development. The company has pushed Game Pass aggressively as its core gaming strategy, prioritizing subscription revenue over blockbuster releases. With Starfield's lukewarm reception, internal confidence in Bethesda's ability to deliver hits appears shaken.
These layoffs carry weight beyond employment figures. Bethesda and id Software employ some of the industry's most respected developers. Losing 50 percent of specialized teams risks institutional knowledge loss and project continuity. The damage to morale at studios already processing the October cuts compounds the challenge.
Microsoft has not publicly detailed how many Bethesda and id Software employees face termination. The company typically avoids specifics beyond aggregate numbers.