Xbox Lays Off 3,200, Nintendo Discontinues Switch, Sony Disc Backlash
Jul 6, 2026 · 15d ago
The video game industry is reeling from a series of massive structural shifts that will redefine how players buy and play games for years to come. Microsoft has initiated the most significant restructuring in Xbox history, while Nintendo prepares to phase out its legacy hardware in Europe. The backlash against Sony's decision to abandon physical media also continues to mount as fans and developers speak out.
Xbox Lays Off 3,200 Employees and Divests Five Major Studios
Microsoft has announced a massive restructuring of its gaming division, cutting 3,200 jobs—roughly 20% of its Xbox workforce—over the next fiscal year, with 1,600 layoffs taking effect immediately . As part of this historic downsizing, Xbox is parting ways with five of its prominent development studios . Double Fine Productions and Compulsion Games are transitioning back to independent status while retaining the intellectual property rights to their respective franchises, including Psychonauts and South of Midnight . Ninja Theory and Undead Labs are being sold off, and Microsoft is currently in talks to sell or close Arkane Lyon .
The cuts have also deeply impacted ZeniMax Media and Bethesda Softworks, forcing a significant overhaul of their development pipelines . Bethesda Game Studios, ZeniMax Online Studios, id Software, and Obsidian Entertainment have all suffered substantial staff reductions . In response to the layoffs, Bethesda leadership has instructed staff to focus exclusively on the company's strongest core franchises, such as Fallout, The Elder Scrolls, Doom, Quake, and Wolfenstein . This strategic pivot has cast doubt on the future of unannounced projects and potential sequels like Starfield 2, while the development roadmap for The Elder Scrolls Online is already shifting due to the loss of senior talent . Despite the scale of the cuts, Xbox CEO Asha Sharma stated that no publicly announced first-party games have been canceled .
Nintendo Discontinues Original Switch in Europe and Plans Switch 2 Revision
Nintendo has confirmed plans to officially discontinue all models of the original Nintendo Switch, including the Switch Lite and Switch OLED Model, in Europe starting mid-February 2027 . Retailers will no longer receive shipments of the decade-old hardware, and sales on the official Nintendo Store will cease at the same time . This phase-out comes as Nintendo shifts its full focus to the Nintendo Switch 2, which launched last year.
To comply with upcoming European Union Right to Repair directives and battery regulations, Nintendo is launching a hardware revision for the Nintendo Switch 2 in Europe this autumn . This new model will feature user-replaceable batteries for both the main console and the revised Joy-Con 2 controllers . The redesign introduces minor physical changes, resulting in a 1% reduction in battery capacity and making the console and controllers roughly 14 grams heavier overall .
Over 120,000 Sign Petition Against Sony Plan to End Physical PlayStation Discs
A massive wave of community backlash has hit Sony Interactive Entertainment following its announcement that it will cease all physical game disc production starting in January 2028 . A leading online petition urging Sony to preserve physical media options has rapidly surpassed 120,000 signatures . Industry figures have also voiced their concerns, with Death Stranding director Hideo Kojima expressing sadness over the decision and warning of the implications of losing physical media ownership .
In response to the growing controversy, Sony has clarified to publishers that they will still be allowed to re-order batches of physical discs for games released prior to the 2028 cutoff date . Reports suggest that Microsoft is still evaluating whether its next-generation Xbox console, codenamed Project Helix, will support physical discs .
Marvel Tōkon Fighting Souls Blocked on Steam in Over 130 Countries
The PC version of Marvel Tōkon: Fighting Souls is facing severe backlash after Steam backend data revealed the game has been blocked from purchase in over 130 countries . The widespread restriction is believed to stem from a mandatory PlayStation Network account requirement, echoing the controversial region-locking issues that plagued Helldivers 2 on PC . This decision has frustrated players in regions where the PlayStation Network is officially unavailable, preventing them from purchasing or playing the upcoming multiplayer title on Steam .
