Microsoft’s July 2026 restructuring of Xbox has landed hardest on a single studio: id Software, the 32-year-old Texas developer behind Doom and Quake. A Worker Adjustment and Retraining Notification (WARN) filing with the Texas Workforce Commission confirms that 136 of the studio’s 185 employees — roughly 74% of its workforce — were let go, split between 96 on-site staff in Richardson, Texas, and 40 remote workers. The cuts landed the morning of July 6, one day before a paid Doom: The Dark Ages expansion the team had spent months finishing was scheduled to ship.
The id Software cuts are the sharpest single-studio percentage loss inside a much larger Xbox restructuring that eliminated roughly 3,200 roles company-wide, and they’ve triggered a formal labor complaint from the Communications Workers of America (CWA), the union id Software’s staff joined just seven months earlier. This is a distinct, narrower story from Xbox’s broader restructuring — it’s about what happens when a specific, storied studio absorbs the deepest cut in a corporate-wide reset, and what recourse a newly unionized workforce actually has when that happens.
What Happened: 136 of 185 id Software Jobs Cut
The scale of the id Software cuts wasn’t part of Microsoft’s original public messaging — it emerged through a state-mandated WARN notice, the same mechanism that revealed the scope of Microsoft’s broader layoffs in previous rounds. According to reporting compiled by Game Developer, the notice filed with the Texas Workforce Commission covers 158 total ZeniMax-affiliated layoffs in Texas, of which 146 employees were represented by CWA. Of that group, 136 came specifically from id Software: 96 working on-site at the Richardson, Texas headquarters and 40 working remotely.
That figure evolved as the story broke. Early union-sourced estimates circulating around July 11 put the toll at “at least 92 of roughly 185” — already alarming, but the more complete, WARN-sourced figure of 136 didn’t surface until roughly ten days later, once the paperwork caught up with the layoffs themselves. Either way, the studio didn’t just lose a management layer or a support function; it lost the bulk of its production capacity in a single week, according to Tech Times’ detailed account of the cuts, which draws on Game Developer and Kotaku sourcing inside the studio.
Inside the “Resetting Xbox” Memo
The id Software cuts trace directly back to a July 6, 2026 memo from Xbox CEO Asha Sharma, published on news.xbox.com under the title “Resetting Xbox.” Sharma described roughly 3,200 role eliminations across Xbox’s fiscal year 2027, with about 1,600 taking effect immediately, calling it the most significant restructuring in Xbox’s 25-year history. The memo was unusually blunt about the underlying math: Sharma said the Xbox content and services business was “not healthy,” and that the division had been losing approximately 64 cents for every dollar invested across its first-party game studios.
Alongside the headcount reduction, Microsoft divested four studios outright — Double Fine Productions, Ninja Theory, Compulsion Games, and Undead Labs — effectively shrinking Xbox’s first-party portfolio rather than just trimming it. id Software wasn’t divested or closed. It was kept, but hollowed out to a fraction of its prior size, which is arguably a harder outcome to communicate internally than an outright studio shutdown: the brand survives, but the team that built it mostly doesn’t.
The Cruelest Timing: A DLC Ships the Next Morning
What made the id Software round land differently than Xbox’s other 2026 cuts was the calendar. Doom: The Dark Ages – Revelations, a paid expansion the studio had been finishing for months, shipped on July 7 — one day after the layoffs hit. It shipped on schedule and picked up strong reviews. Developers who were cut told Kotaku, in reporting cited by Tech Times, that they had crunched for months to hit that release date before being let go the following morning.
That sequencing is what turned a routine corporate restructuring line-item into a story with real emotional weight inside the games industry: the same people who worked unsustainable hours to ship a product on time did not get to see it launch as employees of the studio that made it. It’s a distinct dynamic from Microsoft’s earlier 2024 rounds, which mostly followed cancellations or studio closures rather than a successful launch.
Who Got Cut: Doom (2016) Veterans Hit Hardest
According to an anonymous current id Software source cited by Game Developer and repeated in Tech Times’ reporting, the cuts fell disproportionately on veterans of Doom (2016) — the roughly seven-year development effort, including a scrapped “Doom 4” reboot attempt, that rebuilt the franchise and the studio’s reputation after a rocky decade. Developers who had put in what the source described as an unsafe number of hours on that project were reportedly among those let go, a detail that has stuck with current and former staff more than the raw headcount number.
Former id Software principal VFX artist Derek Best, now outside the studio, summarized the frustration bluntly in comments reported by GamesRadar+: cutting the team down and folding it into a support-studio footprint, in his framing, undoes what the studio’s Doom-era success was supposed to represent. That sentiment — that the people who saved the franchise once are the same people being cut now — runs through nearly every piece of coverage of this story.
Frankfurt’s Engine Team Loses Half Its Staff
The cuts weren’t limited to Texas. id Software’s Frankfurt, Germany office — home to part of the id Tech engine team — lost 6 of its 12 staff, according to German outlet PCGamesHardware, which cited Aftermath’s reporting on the internal breakdown. James Steele, a lead programmer at the Frankfurt studio, posted on LinkedIn that the round had reached his office too, that several colleagues had been told their roles were no longer needed, and that he still expected id Software to continue in some form.
Losing half of a 12-person specialist engine team is a small number next to the Texas headcount, but it matters disproportionately for a studio whose entire identity is built around in-house engine technology. id Tech has powered every mainline Doom title since the 1990s, and a leaner Frankfurt office means fewer hands maintaining and evolving it going forward.
Studio Leadership Pushes Back on “Gutted” Claims
Doom: The Dark Ages director and id Software co-studio director Hugo Martin addressed the backlash directly during a Slayers Club Live stream on July 17, according to coverage from WCCFTech and GamesRadar+. Martin pushed back on reports that the studio had been reduced to roughly 50 people, arguing that id Software was now roughly the size it had been during Doom (2016)’s development, and that id Tech remained active and healthy.
That framing didn’t land well internally. An anonymous current employee, quoted in the same Game Developer and Tech Times reporting, pushed back directly on the “same size as 2016” comparison — arguing that halving a team and calling the result equivalent to a prior headcount ignores that the team is, in their words, half here and half gone. The dispute is partly about arithmetic and partly about history: as the next section covers, the 2016-era headcount Martin is comparing against was itself a studio that had been rebuilt from a near-collapse using outside help, not an organic baseline.
The CWA Files an Unfair Labor Practice Charge
id Software’s 165 workers voted to unionize with the Communications Workers of America in December 2025 — just seven months before the July 2026 cuts. By the time the layoffs hit, the union and Microsoft had not yet ratified a first contract, leaving the newly organized workforce without the contractual advance-notice or recall protections that other Microsoft-adjacent unions have already secured through ratified agreements, including ZeniMax Workers United’s QA unit, Raven Software QA, and Blizzard Quality Assurance.
On July 15, 2026, the CWA filed an Unfair Labor Practice charge naming Microsoft, Xbox, ZeniMax Media, id Software, and Bethesda Game Studios as respondents. The charge alleges that federal labor law required Microsoft to bargain with the union before implementing layoffs during the status-quo period that applies while a first contract is still being negotiated, and that the company failed to do so. Derrick Osobase, CWA District 6 Vice President, was reported by Tech Times as warning that the layoffs would lower the quality of id Software’s games and lengthen the delays between releases going forward. As of the most recent reporting, Microsoft was still in negotiations with the union and had not issued a public response to press inquiries about the charge.
Why a Union Without a Ratified Contract Couldn’t Stop the Cuts
The gap between id Software’s outcome and the protections other Microsoft-adjacent unions have is really a story about timing. Under the National Labor Relations Act, an employer generally has a duty to bargain in good faith over the effects of a decision like a mass layoff once a union is recognized — but that duty doesn’t, by itself, block the layoff from happening, and it carries far less practical weight without a ratified contract spelling out specific notice periods, severance terms, or recall rights. Unions that had already reached that stage, like the ZeniMax Workers United QA unit, went into any future restructuring round with contractual protections id Software’s seven-month-old union simply didn’t have time to negotiate.
id Software wasn’t the only Microsoft-adjacent studio to feel the July restructuring. ZeniMax Online Studios, the team behind The Elder Scrolls Online, reportedly lost hundreds of roles in the same period, and Obsidian Entertainment saw a significant reduction as well. Separately — and this is a detail worth keeping distinct — Microsoft cut roughly 4,800 employees company-wide in a concurrent but unrelated round that isn’t part of the 3,200-role Xbox figure. The overlap in timing has led to some conflation of the two numbers in casual coverage, but they describe different cuts across different parts of the company.
id Software’s History of Near-Collapse
The “we’re the size we were in 2016” reassurance from studio leadership carries more weight, or less, depending on how well you know what that 2016 studio actually was. id Software’s history includes at least one earlier near-collapse, and the rebuild that followed is directly relevant to how much slack the studio has left this time.
The Doom 4 Reboot That Never Shipped
Between roughly 2009 and 2011, id Software worked on a reboot of Doom internally referred to as “Doom 4” — a project that was ultimately scrapped after a difficult, multi-year development process. That period coincided with what’s been described as a massive turnover and exodus of staff around 2010-2011, leaving the studio in a considerably weakened state heading into the rebuild that eventually produced Doom (2016).
Crytek Engineers and an Outside Studio Rebuilt Doom (2016)
Starting around 2013, id Software rebuilt its capacity by recruiting a large portion of Crytek USA’s engine team, acquiring Escalation Studios and renaming it Bethesda Dallas, and leaning heavily on an external studio, Certain Affinity — which contributed roughly 140 developers — to help finish Doom (2016) in time for launch. That’s the important context missing from a simple “same size as 2016” comparison: the 2016-era id Software wasn’t an organically staffed studio operating at steady-state, it was itself a reconstruction propped up by acquired talent and outside contractors after a near-collapse. Whether the post-2026 studio can repeat that trick with a workforce this much smaller, and without the same acquisition capital Microsoft was willing to spend a decade ago, is an open question.
A Pattern Four Rounds Deep: Xbox Layoffs Since 2024
The July 2026 id Software cuts are the latest in a sequence of Xbox-side reductions that started almost as soon as Microsoft’s $68.7 billion Activision Blizzard acquisition closed in October 2023. The table below lays out the timeline.
| Date | Action | Context |
|---|---|---|
| Oct 2023 | Activision Blizzard deal closes | $68.7B acquisition finalized after regulatory review |
| Jan 2024 | 1,900 of ~22,000 gaming staff cut (~9%) | Mostly ex-Activision Blizzard roles; Blizzard’s “Project Odyssey” survival MMO cancelled |
| Mid-2024 | Multiple studio closures | Arkane Austin and Alpha Dog shut down; Tango Gameworks (Hi-Fi Rush) closed; Roundhouse Studios folded into ZeniMax Online Studios |
| Sep 2024 | ~650 roles cut | Corporate, support, and admin functions |
| 2025 | 9,000+ Microsoft-wide cuts (~4% of staff) | Xbox hit again with multi-studio reductions, cancellations, and closures |
| Jul 6, 2026 | ~3,200 Xbox FY2027 roles cut | id Software’s 136 of 185 (74%) is the hardest-hit studio by percentage |
Seen against that timeline, the id Software round isn’t an isolated event — it’s the fourth distinct wave of Xbox-side reductions in under three years, and the first to be publicly framed by Xbox’s own CEO as a fundamental reset of the business rather than an integration cost or a portfolio trim.
How This Compares Across the 2026 Games Industry
id Software’s 74% reduction is severe even by the standards of a games industry that has had a rough 2026. It’s worth putting it side by side with other studio-level crises the industry has weathered this year.
| Studio / Company | Scale | Outcome |
|---|---|---|
| id Software | 136 of 185 staff (74%) | Studio continues; CWA files Unfair Labor Practice charge |
| Bungie / Marathon | Third layoff round in the project’s history | $200M Barrett wrongful-termination suit settled; Marathon’s Steam wishlist collapsed roughly 91-92% |
| Ubisoft | Barcelona studio closed | €1.3B operating loss; stock down ~93% over seven years |
| Nacon (Midgar Studio) | Full studio closure | Second Nacon studio shut in three months |
What separates id Software from the rest of that list is that it’s neither a closure nor a cancellation — it’s a storied, still-operating studio that lost three-quarters of its staff in one week while simultaneously shipping a product. That combination doesn’t have a clean precedent elsewhere in this year’s wave of industry bad news.
Market Impact: Xbox Hardware Revenue Keeps Sinking
The restructuring didn’t happen in a vacuum — it’s a direct response to a hardware business that has been declining for over a year. Per Microsoft’s own investor disclosures, Xbox hardware revenue fell 29% year-over-year in fiscal Q1 2026, 32% in Q2, and 33% in Q3 FY26 — three consecutive quarters of 30%-plus declines. Total Gaming revenue for Q3 FY26 fell 7% (down $380 million) to $5.34 billion, even as Xbox highlighted record player engagement figures across its content and services business.
Independent analysis backs up the trend line. S&P Global’s Kagan unit forecasts Xbox Series X|S will ship around 2.5 million units in 2026, down 22% year-over-year, against 13.2 million for PlayStation 5 and 17.1 million for Switch 2 — leaving Xbox as the smallest hardware platform by a wide margin heading into the console cycle’s back half. Microsoft has confirmed it will report fiscal Q4 2026 results (covering April through June) after market close on July 29, 2026 — the first earnings report to land after the id Software cuts and the broader “Resetting Xbox” announcement, and the first real test of whether the restructuring is showing up in the numbers yet.
What’s Next for id Tech and the Doom Franchise
id Tech 8, the in-house engine that powers Doom: The Dark Ages, remains active according to Martin, who says Frankfurt engineers and staff from Bethesda’s MachineGames continue to support it post-layoffs. Beyond that, concrete plans for id Software’s next project are thin. Multiple outlets have reported unconfirmed, early-stage concepts circulating inside the reduced studio — including an original IP compared to John Wick, a new Perfect Dark title, and a multiplayer or co-op-focused Doom concept — but none of this has been officially confirmed by id Software or Microsoft, and it should be read as rumor rather than roadmap at this stage.
What is confirmed is that whatever comes next will have to be built by a team roughly half the size of the one that shipped Doom: The Dark Ages, without the multi-year runway id Software had in the lead-up to Doom (2016), and without the same acquisition-fueled headcount boost Microsoft was willing to fund a decade ago.
Five Predictions for the Fallout
- Q4 FY26 earnings (July 29) will be scrutinized for early cost-savings signals, but a single quarter is unlikely to show whether the restructuring meaningfully slows Xbox hardware revenue’s 30%-plus decline rate.
- The CWA’s Unfair Labor Practice charge will likely take months to resolve through NLRB processes, and even a finding in the union’s favor would more plausibly produce a bargaining order or remedy than a reversal of the layoffs themselves.
- Other recently unionized but not-yet-under-contract Microsoft and ZeniMax studios face similar exposure in any future restructuring round, which should accelerate urgency around ratifying first contracts across CWA-organized teams.
- id Software will likely lean on external support studios again, echoing the Certain Affinity playbook from Doom (2016), to compensate for the reduced in-house headcount on its next major release.
- Expect continued unconfirmed rumor-mill activity around new id Software concepts, but no official greenlight or reveal in the near term while the studio absorbs the cuts operationally.
Frequently Asked Questions
How many people did id Software lay off in 2026?
A WARN notice filed with the Texas Workforce Commission confirms 136 of id Software’s 185 employees were cut — 96 on-site in Richardson, Texas, and 40 remote — roughly 74% of the studio’s workforce. Frankfurt’s engine team separately lost 6 of its 12 staff.
Why did Microsoft cut so much of id Software’s staff specifically?
The cuts are part of a roughly 3,200-role restructuring across all of Xbox, announced by CEO Asha Sharma in a July 6, 2026 memo. Microsoft hasn’t publicly explained why id Software was hit harder, in percentage terms, than most other studios in the same round.
Was Doom: The Dark Ages – Revelations affected by the layoffs?
No. The paid expansion shipped as scheduled on July 7, 2026, one day after the layoffs, and received strong reviews. Several developers who worked on it were laid off the day after its release.
Is id Software shutting down?
No. Unlike Double Fine Productions, Ninja Theory, Compulsion Games, and Undead Labs — which Microsoft divested in the same restructuring — id Software continues to operate, at roughly a quarter of its prior headcount.
What is the CWA’s Unfair Labor Practice charge about?
Filed July 15, 2026, it alleges Microsoft was legally required to bargain with id Software’s union before implementing the layoffs during the status-quo period that applies while a first contract is still being negotiated, and that it failed to do so. Microsoft was still in negotiations as of the most recent reporting.
Did id Software’s staff have a union contract protecting their jobs?
No. The 165-person unit voted to unionize with the CWA in December 2025, but no first contract had been ratified by the time the July 2026 layoffs hit, leaving them without the advance-notice or recall protections that unions with ratified agreements — like ZeniMax Workers United’s QA unit — already have.
Has id Software survived a crisis like this before?
Yes, in a different form. Around 2010-2011, mid-development on a scrapped “Doom 4” reboot, the studio saw a massive staff exodus. It rebuilt starting in 2013 by recruiting much of Crytek’s engine team, acquiring Escalation Studios, and using roughly 140 developers from outside studio Certain Affinity to finish Doom (2016).
When will we know the financial impact of the Xbox restructuring?
Microsoft reports fiscal Q4 2026 earnings (April-June) after market close on July 29, 2026 — the first quarterly report to land after both the “Resetting Xbox” memo and the id Software cuts.
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