213 people lost their jobs at the video game studio ZeniMax Online Studios, thanks to a fresh round of layoffs over at Xbox and its parent company Microsoft. Among them is nearly every veteran who’s worked on The Elder Scrolls Online (also called ESO).
With even more layoffs expected at Microsoft over the next year, are there dark days ahead for the MMORPG?
The layoffs at ZeniMax, explained
A Maryland WARN or Work Adjustment and Retraining Notification notice filing (that’s the notice companies have to file before mass layoffs) confirmed that 379 people across ZeniMax Media and ZeniMax Online Studios are losing their jobs. 213 of those job cuts directly impact ZOS because the studio is basically losing the entire leadership team behind ESO, which includes:
- Joe Burba, Studio Head who’d only taken the role a year earlier after founder Matt Firor left
- Rich Lambert, Studio Game Director and the face of ESO for years
- Susan Kath, Executive Producer for ESO
- Ala Diaz, Production Director
The WARN notice sets their termination date for September 4, 2026. The outgoing leaders will stay to ensure the transition process is as smooth as possible. Taking the reins are two ZOS veterans, Josh Henderson (moving up from Head of Business Operations) and Nick Giacomini (who’s been ESO’s Game Director since last year).
The Ghost of Project Blackbird
A good chunk of ESO’s player base fears that these layoffs are a sign that the game is one step closer to shutting down. Steam concurrent player counts are down roughly two-thirds from their peak in early 2024. By late 2025, players on the official forums were already comparing the population to where it stood back in 2017. Now with these layoffs, some fear ESO will suffer the same fate Project Blackbird experienced.
Back in 2018, ZeniMax Online Studios started working on a new project. Codenamed Project Blackbird, it was supposed to be the studio’s next big MMO. By early 2025 the team working on Blackbird was around 300 people with a planned release window of 2028. Xbox executives were reportedly impressed with it. ZOS’s founder, Matt Firor wrote on LinkedIn that Blackbird was the game he’d been waiting his entire career to make.
Then in the summer of 2025, Microsoft cancelled it due to a massive wave of layoffs at Xbox. ZOS’s Matt Firor resigned in protest almost immediately, and the entire Blackbird team (over 200 people) lost their jobs.
Why would a studio pour years into a brand-new project instead of just doubling down on a game that had already crossed $2 billion in lifetime revenue? Because a game will eventually hit a ceiling the older it gets. It doesn’t matter how well it’s maintained or how good the game is. It’s going to hit its peak, so studios try to create a second game and pray it becomes a hit to fund future growth.
I’ve played ESO, off and on, since beta. When it first came out, it was a mess but the team worked hard to improve it. And they did! ESO played like a single player game, which the player preferred, making it the most expansive Elder Scrolls game on the market. I enjoyed exploring different areas and learning more about the world and the stories within.
I stopped playing about a year ago because the game felt like it was in maintenance mode. I realized I was doing the same quests except in a different area, a different expansion.
When it came out that ESO was suffering because the focus was on Blackbird, it shows once again how easy it is for a company to be mismanaged. Elder Scrolls is a powerful IP to let slip away. Instead, especially with Elder Scrolls 6 coming out, the focus should have been to improve ESO so it could actively compete with World of Warcraft and Final Fantasy 14. From a story standpoint, it rivals both games.
I understand wanting to expand and diversify. I am very curious about Blackbird. From a business standpoint, Firor found a game he loved and threw everything at it, allowing ESO to suffer. But did Todd Howard know that Blackbird was being made at the expense of ESO? Microsoft loves money so the fact that they decided to cancel it is a red flag.
It’s a pattern you’ll see across the gaming industry. Developers will stop focusing on the money-maker players want to play to work on a completely different project. Bungie did it by prioritizing Marathon over Destiny 2, CIG is doing it now by focusing on Squadron 42 over Star Citizen (for example SQ42 was supposed to be released in 2016). And the studio behind EVE Online has so many failed projects it’s hard to keep track. Which is sad because all that time and resources could have gone towards making EVE an incredible game. Diversifying is important but the examples I gave are clear cases of mismanagement on the company’s end.
ZOS is now a support studio for Bethesda
On July 17, Bethesda Game Studios director Todd Howard put out an official statement addressing the developer’s future. He confirmed that Bethesda will “partner closely” with ZeniMax Online Studios on the future of The Elder Scrolls franchise going forward. Howard explained that “by aligning more directly across the franchise, we can create even better experiences for players.”
What this means is that ZeniMax Online Studios will aid in the production of The Elder Scrolls VI, which is Bethesda’s “primary development focus today, with the majority of our team currently working on the next chapter of the franchise.” ZOS will continue to provide updates for ESO. But the studio is now officially a support studio for Bethesda to produce future Elder Scrolls projects rather than operating as its own independent developer.
What does any of this mean for ESO?
ZeniMax Online Studios has tried to reassure fans that it’s still committed to ESO. According to Baratron, the admin of the UESP Discord and prominent Elder Scrolls Online player, the team at ZOS is now roughly the same size it was when it made the acclaimed DLCs Wrothgar and Summerset.
ESO’s Kevin Gbolie posted on the official forums that the studio is working on a new roadmap for the game and that the goal is to create content beyond the recently launched Season One update.
However, former senior encounter designer Morgan Goin stated in an interview with the BBC that the development team doesn’t have enough workers to release as much content at the speed that they were before the layoffs. Even if ESO continues to receive new updates, the frequency of when the game gets them will slow down a bit. In my opinion, ZeniMax Online Studios was being mismanaged. Firor’s desire to create his dream game came at the cost of letting a powerful IP like an Elder Scrolls game slide. It’s going to be difficult, if not impossible to regain the momentum the game has lost.
For now, ESO isn’t in danger of shutting down anytime soon. But the MMORPG is entering a new chapter of uncertainty as ZeniMax Online Studios figure out what its next move will be.
