This could even deal a serious blow to a legendary studio, so the situation is starting to look extremely bizarre.

For several weeks now, rumors of mass layoffs at Xbox have been growing louder, and it seems the crosshairs have now shifted to ZeniMax. On Monday, multiple sources suggested that Compulsion Games, Double Fine Productions, and Ninja Theory are desperately trying to negotiate with Microsoft over an exit, whether that means becoming independent or being sold to another publisher. According to rumors, however, other studios are also affected: a French journalist also mentioned Arkane Lyon, Bethesda Game Studios, and id Software. These three studios operated under ZeniMax Media before the $7.5 billion acquisition.

George Broussard, co-founder of 3D Realms and Apogee, as well as one of the creators of the Duke Nukem series, said on Twitter that layoffs have begun at the division formerly known as ZeniMax, and that they will be very drastic. One of his followers claimed to have heard that everyone not working on The Elder Scrolls and Fallout would be laid off, to which Broussard replied: “Getting word that layoffs at ZeniMax have begun. Heard rumblings recently that the cuts may be much deeper than you expect. Buckle up! Oh, is that public now? That’s exactly what I heard a few days ago. We’ll see.”

Getting word that layoffs at Zenimax has begun. Heard rumblings recently that the cuts may be much deeper than you expect. Buckle up!

– George Broussard (@georgebsocial) June 17, 2026

Oh is that public now? That’s exactly what I heard a few days ago. Guess we’re about to see.

– George Broussard (@georgebsocial) June 17, 2026

If this were true, it would be catastrophic. It would not only mean the closure of Arkane Lyon, which earlier rumors did indeed mention among the studios at risk, but also id Software and possibly MachineGames. Their DOOM, Wolfenstein, and Indiana Jones games have all performed well among critics and audiences alike, although perhaps more in the former category than the latter. Closing these highly respected studios would be a serious blow to Xbox’s image. At the same time, it is not as though they have not done this before: around two years ago, Xbox already shut down Arkane Austin, Tango Gameworks, and Alpha Dog Games. Xbox CEO Asha Sharma also noted that they want to increase funding for their biggest first-party game franchises, especially The Elder Scrolls and Fallout.

Essentially, this would mean cutting less profitable franchises in order to make room for much greater production of the franchises that generate more revenue.

Source: WCCFTech