Each day this week has been in competition with the others to bring us the worst possible news out of Microsoft. Monday was ugly numbers, Tuesday was dismal details, and today is sheer indignity.
The most eye-popping headline comes from Bloomberg, which reports that Obsidian has been forced to cancel—or at least backburner—a sequel to the brilliant Avowed in favor of a new Fallout. There are, of course, arguments in favor of this move: Back in the day, Obsidian created what is now the most revered Fallout of the modern era, New Vegas, and if Microsoft is going all in on existing franchises, it could have picked worse places to start.
But under Microsoft’s prior stewardship, Obsidian blossomed into a seedbed for homegrown creativity, with clever, critically acclaimed curios like Pentiment sandwiched between more traditional (and also original) triple-A fare like Grounded, Outer Worlds, and the aforementioned Avowed. Obsidian was thriving in its own lane. Now, down 52 employees according to a WARN notice obtained by Game File, it’s being shoved into the shackles of an existing IP with all the restrictions and TV tie-ins that entails.
The WARN notice paints a grim picture in terms of the talent that got cut loose, with 19 senior-level staff carelessly tossed aside, as well as an art director, a principal producer, and a principal character artist. It gets even worse when you look at the WARN notice for id Software, also obtained by Game File, which shows that in total, a whopping 136 employees were laid off—72 of them senior or principal. Many of them also worked in technical roles, potentially hamstringing the studio’s vaunted id Tech engine, a hallmark of its games. And again, this comes just as id released substantial DLC for the latest Doom, which necessitated “significant” crunch, according to current employees to whom Aftermath spoke.
According to CWA, the union that helped many game workers at Microsoft organize, id Software had 185 employees as of last December, 165 of whom joined the union. The majority of those laid off this week were CWA members; a cynical mind could come to the conclusion that Microsoft ripped and tore this specific studio to the bone for a reason, especially after it spent years stalling contract negotiations with a plethora of studios under its umbrella. Then again, most id employees were union, so it could also have just been a simple numbers game. Regardless, id is now in tatters.
“I'm still in shock at how brutal the layoff cuts were,” former principal VFX artist Derek Best wrote on LinkedIn. “Collectively decades of knowledge was wiped out of the studio. The VFX team was eliminated down to one single artist with no lead or producer. The engine programmer responsible for the massive gains in VFX pipeline improvements (like all the particle editor work) was let go as well. All devs that had Houdini knowledge for procedural modeling or cached animations were wiped out, so all the work for Doom: The Dark Ages in that program has gone to waste with no one to carry it on.”
“Great job, Microsoft,” he added. “Nothing says business success like nuking a team into the dirt and relegating them to support studio size while also throwing out massive technological achievements.”
Prior to the layoffs, id was reportedly working on multiple project pitches, including a Western-style robot game, a cyberpunk Chicago “gun fu” game, and a new Perfect Dark. Now nothing is certain.
“We have gotten no studio-wide announcements on what our expectations are going forward after these awful cuts,” a current id employee told Aftermath. “I wouldn't say no one knows how to use the engine anymore, but there are large gaps now. Our colleagues at id Frankfurt as well as Machine Games both have much stronger labor laws and haven't seen the layoffs we have. But within id many things will have to be relearned by new people or outright abandoned.”
Unfortunately, HR made our office manager take this down almost immediately. They said because it's in a common area, it had to be removed. We've used common areas for many things as a team, including fan works, but HR seems to believe that a Celebration of Service is inappropriate.
— Bethesda Game Studios Union (@bethesdaunion.bsky.social) July 8, 2026 at 7:39 AM
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But the greatest indignity might have been reserved for remaining workers at Bethesda Game Studios in Rockville, Maryland, who this morning set up a memorial to laid-off workers in their office’s common area, only for HR to force them to take it down.
“Unfortunately, HR made our office manager take this down almost immediately,” the Bethesda Game Studios union wrote on Bluesky. “They said because it's in a common area, it had to be removed. We've used common areas for many things as a team, including fan works, but HR seems to believe that a Celebration of Service is inappropriate.”
According to a WARN notice, Bethesda’s Austin office laid off 22 employees this week. As of now it’s unclear exactly how many were let go from the Rockville location, though an ex-employee estimated to Aftermath that at least 70 lost their jobs across Bethesda’s locations. They all deserved better.
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Nathan Grayson
