Dossier

Xbox Crisis Dossier: Canceled PvP shooter spotted

Microsoft has announced a big restructure. Find out what is changing.

NewJuly 23, 2026

Canceled PvP FPS title spotted on LinkedIn profile of former Producer

This is a living dossier, meaning we will be adding new content as soon as we learn more.

TL;DR | Key Highlights

Massive Layoffs: Xbox is reducing its workforce by approximately 3,200 roles throughout Fiscal Year 2027, starting with 1,600 immediate terminations.
Change In Focus: id Software (DOOM) and Obsidian (Avowed, Fallout: New Vegas) have been affected by the restructure. id has shared that although the studio was impacted, they do have a crew left to build the game and tech they are known for. Obsidian is shifting focus from Avowed 2 to a new Fallout game.
Studios Leaving: Compulsion Games, Double Fine, Ninja Theory, and Undead Labs are leaving the Xbox first-party umbrella under various new management and independence terms.
The Root Cause: Xbox leadership admits the business is unhealthy, operating at margins 3-10x lower than competitors, combined with stagnant Game Pass growth and a severe hardware crisis.

Known insider Timur222 spotted an unannounced, canceled PvP FPS title on the LinkedIn profile of a former (Associate) Producer at Bethesda Softworks. According to the listing, the producer worked on the project between 2021 and 2025.

While official details remain sparse, rumors suggest the canceled shooter was being developed by MachineGames. The studio is best known for modernizing the Wolfenstein franchise and, more recently, Indiana Jones and the Great Circle.

This news aligns with Microsoft's recent strategic shift for the Xbox brand, as the company increasingly redirects resources toward its core mega-franchises like Fallout, Halo, The Elder Scrolls, and Gears of War.

Bethesda Softworks had an unannounced PvP FPS title in development (subsequently cancelled, period from 2021-2025) pic.twitter.com/AwUbd5dz4e
— Timur222 (@bogorad222) July 22, 2026

Bloomberg reports that Obsidian Entertainment is shifting its focus from Avowed 2 to a new Fallout title, effectively canceling the planned Avowed sequel.

This strategic pivot is part of a broader initiative to prioritize Xbox's flagship franchises. Xbox CEO Asha Sharma has been openly briefing both the press and the public regarding Microsoft's long-term vision for the Xbox brand.

Concurrently, a new wave of layoffs across Microsoft's Xbox division has hit Obsidian, with reports indicating that approximately a quarter of the studio's workforce has been let go.

Following reports of severe staff reductions, DOOM and Quake developer id Software issued a statement on X clarifying that the studio remains fully committed to game and engine development.

A message from id pic.twitter.com/4i4YyjB3xc
— id Software (@idSoftware) July 10, 2026

While the developer acknowledged it was impacted by the broader Xbox restructuring, management pushed back against rumors of a total collapse. The studio emphasized that it maintains a flat organizational structure where "everyone is a maker," noting that its current headcount remains roughly the same size as the team that developed DOOM (2016).

The statement arrives amidst a tumultuous week for parent company Microsoft, where widespread layoffs across the Xbox division have hit ZeniMax and its subsidiary studios particularly hard.