Bethesda Softworks
Bethesda makes Elder Scrolls, Fallout and Doom games, owned by Microsoft/Xbox.
On the record
Checkpoint: Second wave of Xbox layoffs and whether it hits Bethesda core teams again
The call
Bethesda's games still sell and matter to Microsoft, but two straight years of layoffs and a shifting Elder Scrolls VI timeline show how uncertain life inside the studio has become.
Bethesda makes popular games like Elder Scrolls and Fallout that millions of people play. These game worlds are hard for other companies to copy because they have years of story, characters, and fan loyalty built in. However, Microsoft, which owns Bethesda completely, has cut hundreds of jobs there in 2026 and plans to cut around 1,600 more Xbox jobs later that year. The big question is whether these cuts will slow down Bethesda's ability to make new games, and when the next Elder Scrolls game will actually come out.
Why
01
AI pressure: None apparent. No AI lab or tool directly threatens Bethesda's franchises; its risk comes from Microsoft's internal cost cuts, not AI competition. Could AI do the core job? Unlikely.
02
Bigger players: Microsoft (Xbox division, parent owner). Microsoft has already cut 440+ union jobs across Bethesda studios in 2026 and plans 1,600 more Xbox layoffs this fiscal year. Could a giant copy it? No, they are blocked.
03
What protects it. Elder Scrolls, Fallout and Doom remain must-have IP for Xbox Game Pass, giving Bethesda leverage Microsoft can't easily replace.
What would change this call
Whether fall 2026 Xbox layoffs (up to 1,600 more) hit Bethesda Game Studios core team again. Shows if Microsoft is further hollowing out the studio behind Elder Scrolls VI.
Elder Scrolls VI gets a firm release window versus slipping past 2028. Indicates whether the flagship IP is on track or stalling under reduced staffing.
NLRB ruling on CWA's July 2026 unfair labor practice charges against Microsoft. Would show whether the layoffs are found to have violated union agreements.
Elder Scrolls VI gets a firm release window versus slipping past 2028. Indicates whether the flagship IP is on track or stalling under reduced staffing.
NLRB ruling on CWA's July 2026 unfair labor practice charges against Microsoft. Would show whether the layoffs are found to have violated union agreements.
Key numbers
- 440+ union jobs cut across Bethesda studios
- 1,600 more Xbox layoffs planned this fiscal year
- Oblivion Remastered hit 4M players in week one
Named risks
- Third consecutive layoff wave could gut Bethesda Game Studios core teams in fall 2026.
- Elder Scrolls VI could slip past 2028 after 50+ team members cut in July 2026.
- Unresolved NLRB unfair labor practice charges and Canadian severance complaint filed July 2026.
- Microsoft weighing sale or closure of sibling studio Arkane Lyon signals further division shrinkage.
- No independent equity exists since Bethesda is a wholly owned Microsoft subsidiary.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Larian Studios | gaining on | Baldur's Gate 3 momentum contrasts with Starfield adding only 2M players in 18 months to mid-2026 |
| FromSoftware | gaining on | Elden Ring franchise cited as outpacing Bethesda's open-world RPG mindshare as of 2026 |
| CD Projekt Red | contesting | Competes directly for AAA single-player RPG audience alongside Bethesda's Elder Scrolls/Fallout lines |
| Obsidian Entertainment | contesting | Also hit by 52 Xbox layoffs in California, July 2026, while collaborating with Bethesda on a Fallout project |
| Sony PlayStation Studios | contesting | Starfield's April 7, 2026 PS5 launch underperformed per analyst commentary |
Questions people ask
- Is Bethesda Softworks profitable in 2026?
- No standalone financials are disclosed. Bethesda has been a wholly owned Microsoft subsidiary since the ZeniMax deal closed March 9, 2021, and its results are folded into Microsoft's Gaming segment, so no independent profit figure exists as of July 2026.
- Who owns Bethesda Softworks?
- Microsoft owns Bethesda through its parent, ZeniMax Media, after announcing the acquisition September 21, 2020 for $7.5 billion; the deal closed March 9, 2021 at a final reported value near $8.1 billion, per Microsoft's own announcement.
- Is Bethesda laying off employees in 2026?
- Yes. OneBGS union reported over 440 union positions eliminated across Bethesda Game Studios, ZeniMax Online, id Software, and QA/corporate teams by July 17, 2026, part of a Microsoft Xbox restructuring cutting 1,600 jobs with 1,600 more planned that fiscal year.
- Could AI replace Bethesda's game developers?
- Bethesda says no for creative work. Studio head Todd Howard stated February 18-19, 2026 that Bethesda Game Studios is 'incredibly cautious' and does not use generative AI for art, writing, or in-game assets, exploring it only for player-analytics tasks.
- When will Elder Scrolls VI be released?
- No firm date. As of July 17, 2026 Bethesda confirmed Elder Scrolls VI is in full production on Creation Engine 3, but staff and reporting warn July 2026 layoffs could push the earliest release to 2028 despite Bethesda insisting the timeline is largely unaffected.
- Who is Bethesda's biggest competitor?
- In open-world AAA RPGs, Bethesda faces Larian Studios and FromSoftware, whose Baldur's Gate 3 and Elden Ring have outpaced Starfield's momentum; Starfield added just 2 million new players in the 18 months to July 2026 versus 17 million total lifetime players.
Timeline
- 2026-07-22CWA Canada files complaint over Montreal Bethesda severance terms
- 2026-07-17Bethesda confirms TES6 in full production, Fallout 5 pre-production, Fallout 3/NV remasters
- 2026-07-17OneBGS reports 440+ union positions eliminated across Bethesda studios
- 2026-07-16CWA files NLRB unfair labor practice charges against Microsoft/Bethesda/ZeniMax
- 2026-07-13Over 50 employees cut from Elder Scrolls VI development team
- 2026-07-10Microsoft reportedly weighing sale or closure of Arkane Lyon
- 2026-07-06Xbox/Bethesda layoffs hit Elder Scrolls Online team amid restructuring
- 2026-04-07Starfield launches on PlayStation 5 with weak sales per analysts
- 2026-02-19Todd Howard says Bethesda Game Studios avoids generative AI for creative work
- 2025-04-22The Elder Scrolls IV: Oblivion Remastered launches, co-developed with Virtuos
Revision history
23 July 2026
First assessed. Losing its protection. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Bethesda - Overview, News & Similar companies (2026-07-06)
- Microsoft to acquire ZeniMax Media and its game publisher Bethesda Softworks (2020-09-21)
- Bethesda Game Studios (2026-07-21)
- Xbox layoffs: Jobs lost at Obsidian, Bethesda, id and ZeniMax Online Studios (2026-07-21)
- Elder Scrolls 6 Development Hit By Xbox Layoffs, Bethesda Faces Major Challenges (2026-07-13)
- CWA Microsoft Xbox Layoff Labor Charge (2026-07-17)
- Fallout 3 and New Vegas remasters announced (2026-07-17)
- The Elder Scrolls IV: Oblivion Remastered is already the 3rd best-selling game of 2025 in the US (2025-05-06)
- Starfield gained just 2 million players in the past 18 months (2026-07-20)
- Starfield (2026-07-17)
- Doom: The Dark Ages (2026-07-22)
- Bethesda Game Studios Isn't Using Generative AI Because Artistic Intention Is Essential (2026-02-19)