More than 1,600 Xbox workers have already lost their jobs in 2026. Another 1,600 are expected to follow before the middle of next year. For a studio like Bethesda Game Studios — the team behind The Elder Scrolls and Fallout — this is not a new experience. It is the fifth time since Microsoft completed its acquisition of ZeniMax in 2021 that the company has conducted a mass layoff cycle across Xbox.
On 19 August 2026, workers across nine US and Canadian cities gathered in person for the Save Our Devs rally, organised by the OneBGS union — the One Bethesda Game Studio worker organisation — in partnership with the Communication Workers of America (CWA). An online stream on the United Video Game Workers CWA Twitch channel ran simultaneously. The message was pointed: this pattern of cuts has to stop.
Before and After Microsoft
One anonymous Bethesda developer who spoke to Kotaku framed the shift bluntly. Under ZeniMax, the studio’s former parent company, layoffs happened occasionally but were not a feature of every working year. They were exceptions, not policy.
“We didn’t have layoffs before, and all of a sudden we have yearly layoffs.”
That change in rhythm is the core of what workers say has altered the culture at Bethesda since Microsoft took over. Job security — not just for individuals but for entire teams — has become contingent on decisions made far above studio level. The July 6 announcement that eliminated 1,600 Xbox roles immediately saw id Software lose roughly half its staff. ZeniMax Online Studios, which operates The Elder Scrolls Online, was heavily cut. Obsidian Entertainment, the team behind Grounded and Pentiment, lost between 60 and 70 workers. More than 50 developers working on Elder Scrolls 6 were among those let go at Bethesda Game Studios directly — described by colleagues as key senior staff.
Save Our Devs: What Workers Are Asking For
The Save Our Devs rally isn’t calling for Microsoft to reverse completed layoffs — it’s asking for the pattern to end and for workers who remain to be treated differently. OneBGS has entered Effects Bargaining, a formal legal process under the National Labor Relations Act, which compels Microsoft to negotiate the consequences of the July cuts: severance packages, healthcare continuation, and recall rights for those let go.
What Effects Bargaining does not require is negotiation over the decision itself. Microsoft was not legally compelled to consult the union before announcing the cuts. For workers at the Bethesda Game Studios Montreal office — where employees described being informed of their redundancy in a three-minute video call during which they were not allowed to ask questions — that distinction feels significant.
Xbox CEO Asha Sharma, who replaced longtime division head Phil Spencer in February 2026, described the July restructuring as “the most significant in Xbox history.” Her public framing positioned it as a necessary reset after the division was reportedly losing money on every dollar invested in first-party game development.
The Bigger Picture
Microsoft’s Xbox cuts do not exist in isolation. The video game industry shed an estimated 45,000 jobs between 2022 and mid-2025, with further rounds following in 2026. Studios have closed, projects have been cancelled, and mid-tier development — the space that once gave the industry its creative diversity — has contracted sharply.
The cumulative toll at Xbox since the Activision Blizzard acquisition closed in 2023 now exceeds 10,000 roles cut across multiple rounds, according to the Bethesda Game Workers Union. The Save Our Devs rally is, among other things, a public statement that this arithmetic has human costs, and that the workers who remain — still building the games that underpin Xbox’s value proposition — intend to make that visible.
The second wave of 1,600 Xbox cuts is scheduled to complete before the end of Microsoft’s fiscal year 2027. No studio has been given guarantees about what that means for their remaining teams.
