The vast Microsoft layoffs have hit video game developers at Rockville’s Bethesda Game Studios and Hunt Valley’s ZeniMax Online Studios.
The company announced Monday plans to eliminate 4,800 jobs, the majority slashed from the gaming division. The layoffs include 3,200 Xbox workers, with 1,600 occurring immediately and the rest planned for later this year.
Nearly 400 Maryland workers will lose their jobs under the latest cuts, according to a WARN notice. The filing lists 213 layoffs at ZeniMax Online Studios and 166 at parent company ZeniMax Media’s Rockville headquarters, which also houses Bethesda Games.
Since Monday, more than a dozen Bethesda and ZeniMax employees have posted layoff announcements on LinkedIn.
Microsoft did not respond to Technical.ly’s request for comment on those affected at the local studios. Instead, a Microsoft spokesperson referred to a statement released by Xbox CEO Asha Sharma.
Sharma wrote that Xbox needs a “reset” as it faces increased competition and bloated development budgets.
“We now find ourselves competing not only with the largest publishers,” Sharma wrote, “but also with smaller independent studios.”
Since Monday, more than a dozen Bethesda and ZeniMax employees have posted layoff announcements on LinkedIn, according to Technical.ly research. Both the Bethesda and ZeniMax development teams unionized in 2024 under the Communications Workers of America (CWA) after being acquired by the tech giant.
The cuts come after years of workforce reductions at Xbox. They follow the company’s pandemic-era spending spree, when it bought smaller studios and gaming giants alike.
“In what is becoming a stressful annual routine, Microsoft has decided to lay off thousands, including MANY of us at Bethesda Game Studios,” the Bethesda union posted Monday on Bluesky. “With over 10k developers already cut from previous rounds, those at the top have deemed that insufficient in fixing their mistakes.”
CWA did not respond to Technical.ly’s questions about the number of laid-off union workers in time for publication.
The post-layoff pivot
For some local game developers, layoffs have become a catalyst for starting something new.
After Microsoft laid off 160 Maryland-based ZeniMax Media employees in July 2025, a group of developers from the abruptly canceled Project Blackbird founded Sackbird Studios. Structured as a worker-owned company, the studio gives its employees full control over creative decisions.
The timing may be favorable. Nearly half of Steam’s top-performing games in 2025 were indie titles. As ballooning budgets and longer development cycles squeeze large publishers, smaller studios are finding success by producing breakout hits with leaner teams and lower costs.
Still, building an indie studio is far from easy. Venture funding for gaming has slowed, and consumer spending has also become more cautious, making it difficult to finance games that can take years to develop.
Sackbird has so far avoided that challenge by bootstrapping the company, but COO David Worley said that independence comes with its own pressure.
“We have to be successful enough to maintain that freedom,” Worley said.
