July 12, 2026
If you thought 2024 was a rough year for the video game industry, the second week of July 2026 just rewrote the definition of turbulence. In the span of seven days, Microsoft gutted one of the most legendary studios in gaming history, Sony confirmed it is killing physical media, Steam broke its own revenue records yet again, Assassin’s Creed returned with a pirate-themed bang, Pokemon Go celebrated a decade of existence, and Warframe unveiled its most ambitious expansion ever. Buckle up — this is the gaming news you need to know.
The id Software Massacre: How Microsoft Gutted the Studio Behind Doom and Quake
Let’s start with the most devastating story of the week. id Software — the studio that effectively invented the first-person shooter genre with Wolfenstein 3D, Doom, and Quake — has been gutted by Microsoft’s sweeping Xbox restructuring. According to a WARN notice filed in Texas, 136 people have been laid off from id Software. Of the 185 people reportedly working at the studio in December 2025, only approximately 49 remain.
GamesBeat, in an insider report based on conversations with former employees, described the cuts as “a bloodbath.” One former employee told the publication: “I was blindsided by it. The scale of it.”
The timing was particularly brutal. The Revelations expansion for Doom: The Dark Ages — which had the most successful launch in id Software’s history — was released just this week, putting the studio in the vulnerable position of being between major projects when the cuts hit.
Former principal VFX artist Derek Best wrote on LinkedIn: “I’m still in shock at how brutal the layoff cuts were. Collectively decades of knowledge was wiped out of the studio. Great job Microsoft. Nothing says business success like nuking a team into the dirt and relegating them to support studio size while also throwing out massive technological achievements.”
Lost Projects: Fury, Perfect Dark, Ironwood, and a Quake That Nobody’s Making
The layoffs didn’t just cost jobs — they killed promising game concepts. Among the projects that were in development at id Software before the cuts:
- Fury — A “John Wick-style” original game with elements of sci-fi, noir, and Louisiana and Chicago gangsters. It had a “modern, cyberpunk-like feel” and gameplay based around “Gun Fu” — a combination of gunplay and martial arts. It was never formally greenlit for production.
- Perfect Dark — A new game in the franchise that has proven a poisoned chalice after the 2025 cancellation of the Crystal Dynamics/The Initiative reboot. Apparently, id Software was pitching its own take.
- Ironwood — A Westworld-inspired robot game focused on survival.
- Multiplayer Doom — A co-op and multiplayer version of the Doom franchise.
Perhaps most concerningly, GamesBeat noted: “No one appears to be working on Quake.” The franchise that gave birth to the term deathmatch and essentially created online multiplayer gaming as we know it is, apparently, without a development team.
With fewer than 50 people remaining, id Software’s ability to produce a full-scale game has been severely compromised. The studio that once defined the cutting edge of gaming technology may now be relegated to a support role — possibly assisting MachineGames on a rumoured new Wolfenstein game.
John Carmack, co-founder of id Software, spoke out about the layoffs: “I’m saddened, but I can’t muster anger or outrage.” John Romero, another key figure in Doom’s creation, also offered his sympathies to those affected.
The Xbox Restructuring: 3,200 Jobs Gone and Counting
The id Software devastation is just one part of a much larger picture. Microsoft’s bold new strategy for Xbox will result in 3,200 people losing their jobs — 1,600 now and 1,600 over the course of the next year. The restructuring will likely see five studios leave Xbox’s roster:
- Double Fine and Compulsion Games are now independent again.
- Ninja Theory and Undead Labs are under undisclosed new leadership.
- Arkane Lyon is in divestment negotiations, leaving the future of the Marvel’s Blade game uncertain.
The irony was not lost on observers when Xbox leader Asha Sharma joined a US government task force for employment — days after announcing the restructuring that left thousands without jobs. She’s representing a “commitment to price stability and maximum employment,” apparently.
The Elder Scrolls 6 Casualties: Bethesda’s Morale Hits Rock Bottom
The ripple effects of the Xbox layoffs extend to Bethesda Game Studios, where the impact on The Elder Scrolls 6 is becoming alarmingly clear. Multiple Bethesda staff members told IGN that more than 50 employees — including “key, high-performing people in the trenches” — have been impacted.
One employee described the cuts as spanning “every discipline: programmers, artists, and designers.” Another revealed that “one person who’s been at the company since Morrowind was cut” — potentially referring to 27-year Bethesda veteran and lead character artist Christiane Meister, who worked on Skyrim, Oblivion, Morrowind, Fallout 3, and Fallout 4.
Employees expect the layoffs will cause a “substantial and cascading effect” on the highly-awaited sixth Elder Scrolls game, increasing the likelihood of crunch and delays. The game, first announced with a teaser trailer in 2018, still has no release date — and has now lost veteran talent that helped define the franchise.
Meanwhile, Obsidian — the studio behind Fallout: New Vegas — has reportedly been moved onto a new Fallout game by Xbox, but at the cost of a sequel to Avowed. The studio’s game director also pushed back against claims that Obsidian “isn’t what it used to be,” stating: “The DNA at Obsidian is the same as it always was.”
In a particularly bitter twist, Bethesda union members announced they will march in protest of the sweeping job cuts. “We mean business,” they declared, demanding that Microsoft “think twice before ever attempting something like this again.”
Steam’s Record-Breaking 2026: $11.1 Billion in Six Months
While Microsoft and Sony face turbulent times, Valve’s PC storefront continues to break records. According to estimates by Alinea Analytics, Steam generated an extraordinary $11.1 billion in revenue in the first half of 2026 — its highest-ever result for that period.
Rhys Elliott, head of market analysis at Alinea, noted that the growth is driven by multiple factors: the massive Chinese market (where 50% of all Steam accounts belonged to Chinese-speaking users as of February 2025), higher prices on new releases, and third-party publishers returning to the storefront after abandoning their own launchers.
“Zoom out over the last decade and things get really crazy,” Elliott said. “There’s obviously a visible dip as the market normalised after the pandemic sugar-high, but the long arc is relentlessly up, with seven half-years of growth.” Over the past decade, Steam has nearly quintupled its revenue.
The Biggest Games of 2026 So Far on Steam
- Forza Horizon 6 — $197.7 million in under two months
- Resident Evil Requiem — $194.5 million since February launch (3.4 million sales on Steam alone)
- Crimson Desert — $190 million since March launch (a brand new franchise)
- Slay the Spire 2 — $141.7 million
- Subnautica 2 — $133.6 million
- Meccha Chameleon — $71.3 million
The contrast is stark: as Microsoft’s gaming revenue drops seven percent year-on-year and PlayStation’s first-party sales continue their decline since 2020, Steam is thriving. Both console makers are also feeling the bite of increased hardware costs thanks to the AI-fuelled RAM crisis, while Valve’s PC-focused strategy continues to pay dividends.
Assassin’s Creed Black Flag Resynced: 2 Million Sales, But Microtransaction Backlash
On brighter news for some, Ubisoft’s Assassin’s Creed Black Flag Resynced had a massive launch, selling two million copies on its first day. The game hit the number one spot on Twitch when it launched on July 9, and achieved a concurrent Steam peak of 99,451 players — the highest concurrent player count ever recorded for an Assassin’s Creed title on the platform.
However, the launch hasn’t been without controversy. The game has been review-bombed on Steam due to the inclusion of cosmetic microtransactions in a single-player experience. Ubisoft responded by stating that “additional packs are entirely optional,” but players are frustrated that a $60 game launched with $85 of DLC available from day one.
Interestingly, the Steam revenue data shows that Resident Evil Requiem earned $1.3 million from its cosmetics pack alone — suggesting that maybe Ubisoft’s strategy, however unpopular, is commercially effective. The game is available on PC, PS5, and Xbox Series, set during the Golden Age of Piracy as players sail the Caribbean as Edward Kenway.
Sony Kills Physical Discs: EU Says It Can’t Stop It
In a decision that sent shockwaves through the industry, Sony confirmed that all PlayStation physical media production will end by January 2028. All releases from that date forward will be digital-only, including code-in-the-box options at retail.
The Don’t Kill the Disc petition on Change.org has amassed over 286,000 signatures, but the European Union has admitted it cannot prevent the move. EU commissioner for consumer protection Michael McGrath stated in Strasbourg: “It does come down to commercial and contractual freedoms, and companies are free to offer games and services in the manner that they see fit, provided that consumer rights are fully protected in line with national and EU law.”
The petition pointedly calls out Sony’s 2013 Official PlayStation Used Game Instructional Video — which mocked the idea of restricting used games — as mocking something the company would become just 13 years later. Adding insult to injury, a new report confirmed that games are almost always cheaper in physical retail shops than digitally — just as Sony announces the end of discs and throws retailers’ futures into question.
The timing is particularly painful for consumers: both Sony and Microsoft are implementing major price increases on hardware, citing the AI-fuelled RAM crisis that has driven component costs through the roof.
Pokemon Go Turns 10: Mewtwo Returns to Times Square
Amid all the industry gloom, there was a moment of pure magic. Pokemon Go celebrated its 10th anniversary by fulfilling the final promise of the game’s original 2016 trailer: giving players the chance to battle Mewtwo in Times Square.
Over 1,000 players gathered in Times Square as the screens went dark and Mewtwo appeared — not just in the game, but on the massive screens lining the iconic location. The legendary Pokemon Mega Evolved into Mega Mewtwo Y, and players battled together in a community raid. Each player received a guaranteed “hundo” (perfect-stats) Mewtwo — caught with a Master Ball, no less.
The event was a nostalgic callback to the magical Pokemon Go summer of 2016, when shouting “Pikachu!” could send people running across a park. The game has now completed everything it set out to do in its original trailer. This weekend’s Go Fest 2026: Global — free for everyone for the first time — will see the global release of Mega Mewtwo X and Mega Mewtwo Y.
Warframe: Tau — Blade Runner Meets The Sopranos
Digital Extremes wrapped up this year’s TennoCon with a massive reveal: Warframe: Tau, the game’s next major update, coming later this year. The expansion brings players to an entirely new solar system inspired by Blade Runner, Boardwalk Empire, and The Sopranos.
The update introduces Brysko, a new detective Warframe voiced by Matthew Mercer (Overwatch’s Cole Cassidy, Critical Role), who wields the Core Cracker revolver and throwable trading cards. The setting is Fornax, a ringed city encircling one of Tau’s planets, featuring oily black rain that revives the dead and mentally scars those exposed to it.
Creative director Rebecca Ford confirmed the expansion tackles themes of addiction and exploitation — with ties to real-world experiences of the developers. “The core question is ‘what are you willing to bet?’ because as many of us know, addiction can take many different forms,” Ford said. “Many members of the team have seen firsthand what overcoming that struggle looks like; it’s very close to our hearts.”
The update will launch with two regions, new mission types, flying Sentient cars, a casino, a jazz club, and a card mini-game. A fall 2026 update called Iceblade of Narin was also announced, adding a new female ice Warframe.
Destiny 2 Enters Maintenance Mode
In quieter news, Destiny 2 has officially entered maintenance mode. Bungie gave players a final farewell gift — an emblem — as the game transitions away from active development. It marks the end of an era for a game that has been a defining live-service title for nearly a decade. The settlement of the $200 million wrongful dismissal lawsuit between Sony/Bungie and the ex-Marathon director also brought closure to one of the industry’s most contentious legal battles in recent memory.
What Does This All Mean?
Taken together, this week represents a seismic shift in the gaming landscape. The traditional console model — already under pressure — is fracturing. Microsoft’s mass layoffs suggest that the Game Pass subscription experiment, while successful in growing subscriber numbers, has not translated into sustainable employment for the studios it absorbed. Sony’s decision to kill physical media signals a future where ownership is conditional and prices are controlled by a single entity.
Meanwhile, Steam’s record-breaking performance proves that the PC market is not just surviving — it’s thriving. Players are voting with their wallets, and the open PC ecosystem is winning. Indie games like Slay the Spire 2 and Meccha Chameleon are generating tens of millions in revenue alongside AAA blockbusters.
The industry is resetting. Whether that reset leads to something better — or simply fewer jobs, fewer studios, and fewer games — remains to be seen. For now, the people who lost their jobs this week are in our thoughts. The games they made will live rent-free in our hearts forever.
What’s your take on this week’s gaming news? Are you concerned about the future of console gaming, or optimistic about Steam’s dominance? Let us know in the comments below.