Microsoft confirmed on July 6, 2026, that id Software is losing a significant number of staff as part of a sweeping restructuring across Xbox Game Studios. Xbox CEO Asha Sharma announced the changes in a company-wide memo, describing them as the most significant reset in the division’s history. The cuts affect roughly 3,200 roles across Microsoft Gaming over the coming fiscal year, with 1,600 eliminated immediately, and id Software is among the studios directly impacted.
The news matters because id Software, the studio behind the Doom franchise, has long been treated as one of Xbox’s flagship internal teams. Seeing it swept into a company-wide layoff round signals that no studio under the Bethesda umbrella is being spared, regardless of past performance or brand recognition. Developers, fans, and industry watchers are now asking what this means for future Doom releases and the broader health of Xbox’s first-party lineup.
Why Id Software Was Included In The Cuts
Sharma’s memo did not single out id Software by name at first. Instead, she pointed to reductions “across other units,” specifically naming Activision, Bethesda and ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios as areas affected in varying degrees. Bloomberg reporter Jason Schreier later confirmed that both id Software and ZeniMax Online Studios had lost staff members that same morning, even though neither studio is being shut down.
This distinction matters. Unlike Compulcio Games, Double Fine, Ninja Theory, and Undead Labs, which are being spun off from Xbox entirely, id Software remains part of the organization. The studio is being trimmed rather than removed, suggesting Microsoft still sees value in its ongoing projects even as it cuts headcount to reduce costs.
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The Financial Pressure Behind The Decision
Sharma was unusually blunt about the numbers driving this decision. In her memo, she said Xbox has been losing 64 cents for every dollar invested in first-party studios in a typical year, and that the division is operating at margins three to ten times lower than comparable platform and publishing businesses. She described the business’s current state plainly, saying it is not healthy.
That kind of financial disclosure from a major tech company is rare, and it gives useful context for why id Software and its sister studios were not exempt from the reset. Xbox entered the current console generation with a smaller installed base than competitors and a cost structure that had grown heavier through years of acquisitions, including the Bethesda and Activision Blizzard deals.
A few factors reportedly shaped the scope of these cuts:
- Disappointing subscriber growth for Xbox Game Pass compared to internal targets
- A large portfolio of studios that increased overhead without a matching rise in revenue
- Up to fourteen layers of management in some parts of the organization, according to Sharma
- A shift toward prioritizing console exclusives and streamlining multi-platform development teams
What This Means For Doom And Future Projects
Sharma’s memo stated that none of Xbox’s publicly announced first-party games or projects are being cancelled as part of these reductions. That is an important detail for anyone following id Software’s next steps, since it suggests any Doom project currently in development is expected to continue, even with a smaller team behind it.
Studios affected by workforce reductions often face longer production timelines afterward, simply because fewer people are doing the same amount of work. Microsoft has not released a revised schedule for any id Software title, and no official statement has addressed whether specific release dates will change as a result of the layoffs.
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How This Fits Into Xbox’s Broader Restructuring
The reductions at id Software are part of a much larger reorganization that Sharma has called Xbox’s biggest reset. Reports indicate the total headcount reduction across Xbox could reach 20 percent, spanning marketing, hardware, and multiple internal studios beyond just Bethesda’s properties. The Xbox parent brand is also spinning off four studios into independent companies while keeping others, including id Software, inside the main organization.
Employee advocacy groups have publicly pushed back. The Bethesda Games Studios union described the situation on Bluesky as a stressful annual routine, noting that more than 10,000 developers had already been cut in previous rounds before this latest reduction. That framing reflects a pattern of recurring layoffs across the games industry rather than an isolated event tied only to id Software.
What Comes Next
Sharma indicated that the reductions announced on July 6 represent the immediate portion of a plan that will continue to unfold through Microsoft’s next fiscal year, meaning further changes at id Software or its sister studios are possible before the cycle ends. Employees affected by the initial round were notified directly through internal communications the same day the memo went out. Microsoft has not provided a public timeline for finalizing the remaining reductions across the roughly 3,200 total roles, so further announcements from Xbox leadership are expected in the coming months.
