“Last year was a hard year for the studio,” Elder Scrolls Online’s executive producer Susan Kath says. “It was a hard year for all of us.” In 2025, as part of sweeping cuts made across all their businesses, Microsoft laid off a significant chunk of Zenimax Online Studios. They did this despite CEO Satya Nadella later calling the year one of “record performance”, with revenue up 15% and hitting $281.7 billion.
So, last week, when Zenimax Online Studios revealed it was moving from releasing major expansions every 12 – 18 months to smaller, more frequent updates every three months, it looked very much like the team could no longer manage those big releases.
Kath tells me that reading of events is wrong.
“Seasons is not in any way a response to that,” Kath says. “We kicked off the Season work at least 12 to 14 months ago. We started making the changes in the team to move in this direction, knowing that this was our intent.”
Instead of my framing that the team must have lost its ability to make large chapter updates, Kath says it’s the opposite. “As a studio, we had two projects in development,” she says, referring to Blackbird.
While never officially announced, Blackbird was to be Zenimax Online Studio’s first new title in 12 years. As part of Microsoft’s cuts, they canned the game. It wasn’t the only game cancelled – The Initiative’s Perfect Dark and Rare’s Everwild were also shuttered despite years of development. Though, Zenimax Online Studios weren’t entirely closed, unlike The Initiative and Prey developer Arkane Austin.
“Ultimately, we had a lot of people doing double duty on those projects, splitting their time between projects” Kath continues. “[They] are now devoted 100% to Elder Scrolls Online. So, in fact, in some capacities, we actually increased the number of folks available as we came out of that because they weren’t managing two products anymore. They were only devoted to one title.”
The team still have the capacity to make chapter-sized updates, but they’re choosing not to. According to Nick Giacomini, refreshing older aspects of The Elder Scrolls Online wasn’t something “the previous way of doing things” allowed. It’s only by stopping the Chapter focus, which absorbed the bulk of the studio’s attention for 12 – 18 months that they can take the time to return to older content and update it to work well with what has been added to the game since its original release. Each season, the team are overhauling a different character class. Starting with the Dragonknight class in Season Zero. Details of the update show most of the class’s skills and abilities are being tweaked and changed, turning it into a character who becomes more dangerous the longer it survives in the fight. It’s this refresh work, clarifying the class’s role in the game, and other updates like it, that Giacomini says is vital for Elder Scrolls Online to last. “We want this to be a 30 year game. That’s not just an empty [wish]. This is our home, this is our player’s home, and we want it to remain so for as long as possible.”
“To say that [the layoffs] didn’t impact us wouldn’t be right,” Giacomini says. “We’re putting on a strong face. We’re human. It absolutely impacted us. But, you know, the team rallied. We’re excited about the future. We’re excited that we’re making all these big changes.”
I can believe what Kath and Giacomini are saying. The team are feeling the losses, but that doesn’t mean there’s no room for optimism regarding ZeniMax Media’s change of focus over the past year. I’ve led teams that went through rounds of layoffs and for those that are left behind you do need to mourn the team that was and refocus the team that’s left, finding excitement for the future, even if that future is no longer the one you envisioned before the downsizing.
It’s also easy to believe that the Elder Scrolls Online was already on the path to a move to smaller Season updates over larger Chapter expansions. After 12 years of expansion, the MMO has grown very large and unwieldy, with many longtime player complaints remaining unaddressed. Many developers with long-running games hit a moment where they need to consolidate and refresh all of their old groundwork. Rainbow Six Siege’s Operation Health is the example I pointed to in the original story about Seasons, but other MMOs have to go through this process, too, such as Runescape’s Summer Sweep-Up. Of course, those studios did it without laying off staff. As Kath and Giacomini are saying, the layoffs and this period of rehabilitation are separate.
Unfortunately for the team at Zenimax Online Studios, their decisions in the coming year will be overshadowed by the Microsoft’s cutbacks. Especially anything that can be perceived as a diminishment of ambition.
