“What is going on at Bethesda?”
That’s a question fans have been asking for a while now without a clear answer. It’s been years since a new entry in the video game studio’s mainline Fallout and Elder Scrolls series was released. Fallout 76 came out back on November 14, 2018 while The Elder Scrolls V: Skyrim was released on November 11, 2011. Then there’s Starfield, the 2023 space-themed RPG that failed to become the breakout hit Bethesda expected it would be.
Now it’s been announced that multiple projects are currently in the works, including The Elder Scrolls VI and Fallout 5. But this news is coming off the heels of job cuts at Bethesda Game Studios due to mass layoffs as Microsoft trims its gaming division.
How Xbox’s business strategy hurt Bethesda
The short story is that Microsoft bought Bethesda’s parent company ZeniMax Media and all its subsidiaries for $7.5 billion, with the deal finalized in March 2021. The acquisition was mainly done to block Sony from making Starfield a PlayStation exclusive, along with boosting Xbox’s offerings on Game Pass to stay competitive. Once the acquisition went through, many Bethesda games, including Starfield, were released as Xbox and PC exclusives.
The results of this strategy have been mixed. Starfield did well initially but failed to live up to the hype. Other games like Redfall flopped or were canceled after Bethesda pulled funding, like Project Blackbird and a first-person shooter from Romero Games. A combination of mismanagement, buying up a bunch of mid-sized game studios, declining revenue, and the growing cost of gaming hardware created an unsustainable business model at Xbox.
The job cuts at Bethesda
On July 6, 2026, Xbox’s new CEO Asha Sharma announced a massive round of layoffs across multiple studios. About 3,200 jobs were cut in total, split between 1,600 people let go right away and roughly 1,600 more expected to leave throughout fiscal year 2027.
Sharma acknowledged in a note to employees that an “aggressively expanded” studio portfolio has not been good for Xbox, as it’s now competing against major publishers and smaller studios alike. “It is neither possible nor desirable to own every great independent studio,” Sharma wrote. “We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested.” In a separate memo published in June, Sharma admitted that despite investing over $20 billion in content (which excludes the $68.7 billion Microsoft spent to acquire Activision Blizzard in 2022), Xbox’s annual revenue has dropped by nearly $500 million.
ZeniMax was hit especially hard with 379 people across ZeniMax Online’s Maryland office and ZeniMax Media’s Rockville office alone losing their jobs. Of the 3,200 cuts across Xbox, 440 jobs were union-represented positions. The developer behind The Elder Scrolls Online, ZeniMax Online Studios, got the short end of the stick. Nearly the entire leadership team for ESO is gone, including Studio Head Joe Burba and longtime Creative Director Rich Lambert. Bethesda released a statement stating that ZeniMax Online will now function as a support studio so it can “partner closely with Bethesda Game Studios on The Elder Scrolls franchise.” Some reports suggest this could lead to ZOS staff working on the development of Elder Scrolls 6, on top of creating content for ESO.
Bethesda Game Studios wasn’t spared either. Developers from their Maryland, Austin, and Montreal offices were let go, including veterans with 18-plus years of experience working on games like Skyrim and Fallout 4. More than 50 people working on The Elder Scrolls VI who were described as key, high-performing staff reportedly left due to the layoffs.
Is Todd Howard part of the problem?
Despite the bloodbath at ZeniMax Media, Todd Howard wasn’t affected by Microsoft’s layoffs. The Director, Executive Producer and longtime face of Bethesda Game Studios is still around to oversee the production and creative direction of the Fallout, Elder Scrolls, and Starfield franchises. And that in itself has become controversial.
As Bethesda enters yet another turbulent period, some fans are questioning whether Howard is the right man for the job. He’s received a lot of criticism for Bethesda’s long development cycles. Nearly 15 years have passed since Skyrim and by the time The Elder Scrolls VI drops the gap between mainline entries will probably be unprecedented for the series. Starfield struggled to reach the same universal acclaim as previous Bethesda games. Its Steam reviews hover at around a “Mixed” rating and its Xbox store page sits at 3.4 out of 5 stars.
Former Elder Scrolls loremaster Kurt Kuhlmann, who was Skyrim‘s co-lead designer and a 20-plus-year veteran, left Bethesda in 2023. According to him, Howard had promised him the lead designer role on The Elder Scrolls VI once Fallout 4 wrapped in 2015, only for Bethesda to move on to Fallout 76 and then Starfield instead. Kuhlmann was left waiting 11 years for a role that never materialized. When Elder Scrolls 6 finally went into active development, Howard reportedly offered him a different, lesser role. Ultimately, the two wanted different things from that point on.
A former Bethesda artist named Dennis Mejillones who worked on Skyrim, Fallout, and Starfield said nearly all of the complaints players raised after launch were flagged by developers during development. However, those same team members felt discouraged from pushing back against Howard’s decisions. The implication that Howard is surrounded by a bunch of “yes men” unwilling to push back on his ideas has been echoed by other former staff.
Where does this leave Bethesda?
It’s tempting to point a finger at Howard for all of Bethesda’s problems, and he’s not completely blameless. Over a decade and a half of slow development, leaving the mainline Fallout and Elder Scrolls series dormant while being reluctant to release spin-offs helped put Bethesda in a position where the studio was vulnerable to Microsoft’s layoffs. The fact that Howard still has his job while dozens of talented experienced programmers, artists, designers, and testers lose theirs has painted a frustrating picture. Why is Howard shielded from the negative after effects of his choices and everyone around him pays the price instead?
To be fair, Howard isn’t lacking in defenders. Longtime Bethesda composer Inon Zur says Howard is a “visionary” who knows how to steer creative freedom toward his own vision, and that Starfield was simply ahead of its time rather than a misstep. The success Howard had with previous Elder Scrolls titles Morrowind, Oblivion, and of course Skyrim is hard to ignore.
At the same time, it’s difficult to place all of Bethesda’s problems on one person. Decisions about acquisitions, layoffs, budgets, release schedules, and staffing come from Microsoft’s Xbox leadership, not Howard alone. But the gaming industry is changing faster than you can blink. Howard’s sloth-like approach to game development and the choices he’s made in how he manages Bethesda will only take him so far.
One thing that is clear is that Xbox and Microsoft’s patience is wearing thin. Reports claim that Sharma wants to accelerate the development timelines across all of the company’s major franchises. Howard has to produce more games sooner rather than later, especially when you remember that more layoffs are dangling over the remaining employees’ heads as if it was Damocles’ sword.
The next couple of years will determine if the gaping hole between what Howard promises and what Bethesda delivers will finally catch up with him.
