Elder Scrolls Online developer Zenimax Online Studios has been hit with a new wave of layoffs as part of Microsoft’s massive Xbox cuts. As Xbox sells two studios and lets two others go independent, major layoffs are taking place across the Xbox, Zenimax, and Activision portfolio.
One of the most affected teams is Zenimax Online Studios, the studio behind The Elder Scrolls Online. According to senior content designer Katherine Souze, ESO has lost “half of its team” that was actively “working on content, events, and dungeons”.
Right now, the full effects of the layoffs are unknown, but many senior developers have been cut including lead dungeon director Mike Finnigan, senior writer designer Jeff Grubb, lead designer Ed Stark, and many more.
In a report by Kotaku, anonymous sources described the cuts as “brutal” with some expressing doubt over whether The Elder Scrolls Online can “continue to function” with the massive scope of Xbox’s layoffs.
As a result of the layoffs, it appears that the future roadmap of content for ESO is already shifting. In a post on the game’s official forums, remaining community manager Jessica Folsom claimed that “the roadmaps we previously shared will be shifting”. Currently, the team is taking “the time to evaluate the work in front of us” and will deliver a “clear timeline” of content releases in the future.
According to the Kotaku report, The Elder Scrolls Online is one of Microsoft’s most successful releases. The MMO has reportedly generated $2 billion in revenue since launch, and was bringing in around $15 million every month prior to layoffs last year, layoffs which resulted in the shift to a seasonal structure instead of the typical expansion structure.
Zenimax Online Studios saw the largest layoffs of Xbox’s cuts during 2025. At that time, the team was working on a brand-new sci-fi MMO which Xbox executives reportedly “loved”. Nevertheless, the studio was gutted and the project was cancelled, causing major players to leave the team to form Sackbird Studios.
Prior to this year’s layoffs, Zenimax Online Studios revealed huge plans for The Elder Scrolls Online. Previously, the studio teased a massive return to Skyrim in early 2027 with an expansion-sized update. However, it’s now unknown if the scope of this expansion-sized update will be hurt by the scale of Microsoft’s layoffs.
Alongside the new content, the MMO team also teased major tech improvements for the game. As well as engine improvements, the team has been working behind-the-scenes on adding cross-play and cross-progression to the game, but it’s unknown if these massive layoffs will hinder the development of those features.
