Xbox Layoffs, Sony Phasing Out Discs, GTA 6 Pre-Orders Live
Jun 22, 2026 — Jul 22, 2026 · 2h ago
The gaming industry underwent a massive structural realignment this month as corporate volatility and shifting platform strategies collided with unprecedented player demand. While major publishers executed devastating layoffs and prepared to abandon physical media, record-breaking pre-orders and robust hardware transitions signaled a highly anticipated next chapter for interactive entertainment. This tension between economic survival and creative passion has set a turbulent tone for the rest of the year.
Xbox Layoffs and Studio Divestments Spark Intense Game Pass Criticism
Microsoft initiated a historic downsizing of its gaming division, cutting 3,200 jobs—roughly 20% of its Xbox workforce—and forcing major first-party studios to pivot their pipelines . The sweeping cuts devastated internal teams, gutting over 200 roles at ZeniMax Online Studios, laying off half the staff at id Software, and forcing Obsidian Entertainment to cancel multiple projects to pivot to a new Fallout game under Josh Sawyer . In response, the Communications Workers of America organized coordinated union protests, while modders flooded Fallout 4 and The Elder Scrolls V: Skyrim with union logos in solidarity .
As part of this "Xbox reset," Microsoft is divesting from several prominent studios, returning Double Fine Productions and Compulsion Games to independent status while selling off Ninja Theory and Undead Labs . This massive contraction coincides with growing skepticism surrounding the Xbox Game Pass subscription model, which former Forza Horizon 5 creative director Mike Brown and Moon Studios CEO Thomas Mahler criticized for failing to meet subscriber targets and prioritizing high volume over cultural event games . Moving forward, Bethesda Game Studios has committed to a multi-year roadmap, confirming The Elder Scrolls VI is in full production and Fallout 5 is in pre-production on Creation Engine 3 .
Sony Phasing Out Physical PlayStation 5 Discs Triggers Global Backlash
Sony Interactive Entertainment sparked widespread outrage after announcing plans to cease manufacturing physical PlayStation 5 game discs by January 2028 . The company has already begun repurposing its primary disc manufacturing facility in Thalgau, Austria, to produce optical microlenses, signaling a firm commitment to a digital-only future . This transition has triggered a massive "Don't Kill the Disc" petition that rapidly surpassed 200,000 signatures, with industry veterans like Hideo Kojima warning of a frightening future where players do not truly own their digital libraries .
The controversy has directly impacted upcoming releases, with Rockstar Games drawing criticism for opting to ship Grand Theft Auto VI retail copies with a digital download code in the box rather than a physical disc, prompting some independent retailers to refuse to stock the game . Despite the digital shift, demand for physical media remains passionate, as the physical "Revered Edition" of Mortal Shell 2 completely sold out ahead of its launch . To ease immediate anxieties, Santa Monica Studio confirmed that the upcoming God of War Laufey will receive a physical disc release ahead of its projected 2027 launch window .
Grand Theft Auto 6 Pre-Orders Shatter Records as Sony Abandons PC Ports
Grand Theft Auto VI is on track to become one of the biggest entertainment launches in history, securing a record-breaking $260 million in pre-orders during its first week alone ahead of its November 19, 2026 release date . Early retail data indicates that PlayStation 5 pre-orders are heavily outpacing Xbox Series X|S versions, prompting Sony and Rockstar to co-market the title with claims that it "plays best on PS5" . To avoid competing with the massive launch, publisher CI Games has already delayed Lords of the Fallen 2 to early 2027 .
This blockbuster momentum coincides with a major strategic pivot from Sony Interactive Entertainment, which has reportedly removed all mentions of PC releases from its latest annual business report to focus on PlayStation 5 console exclusivity . Internal reports suggest that slowing sales for PC ports like God of War Ragnarok and Marvel's Spider-Man 2 did not generate enough revenue to justify the multiplatform push . Instead, the publisher is doubling down on high-budget, first-party single-player console exclusives like Marvel's Wolverine and God of War Laufey to drive console adoption .
Nintendo Switch 2 Gets Replaceable Battery Model as Library Expands
Nintendo has confirmed plans to officially discontinue all models of the original Nintendo Switch in Europe by mid-February 2027, shifting its full focus to the currently available Nintendo Switch 2 . To comply with upcoming European Union Right to Repair directives and battery regulations, Nintendo is launching a hardware revision for the Switch 2 in Europe this autumn featuring user-replaceable batteries for both the main console and the revised Joy-Con 2 controllers .
On the software front, the platform's library continues to grow rapidly with the critical acclaim of Splatoon Raiders, a single-player and co-operative treasure-hunting roguelite spin-off . Third-party support is also ramping up, with Capcom revealing that Dragon's Dogma 2 is running at a minimum of 30 frames per second on the handheld console ahead of its October launch, and Square Enix preparing Dragon Quest XI S: Echoes of an Elusive Age for a September release . Additionally, FromSoftware has scheduled a closed network test for its upcoming PvPvE multiplayer action game, The Duskbloods, on the platform .
Bungie Lays Off Hundreds as Developers Push Back Against Generative AI
PlayStation first-party studio Bungie executed a massive reduction in force, laying off 292 full-time employees and effectively wiping out the majority of the Destiny 2 development team after the game fell short of commercial expectations . In a sudden move, Bungie also announced that Destiny 2 will no longer receive active updates, concluding a landmark decade-long run for the live-service giant . Despite these devastating cuts, Sony Interactive Entertainment remains committed to its live-service strategy, prioritizing upcoming titles like Marathon and Helldivers 2.
Meanwhile, the integration of generative AI in game development is facing intense industry pushback from both developers and players. Epic Games CEO Tim Sweeney's plans to integrate generative AI tools into Unreal Engine 6 prompted Vampire Survivors developer Poncle to actively review its high-profile Fortnite crossover partnership, mirroring concerns from Palworld developer Pocketpair that players do not want generative AI in their games . Electronic Arts is also facing scrutiny after president of enterprise development Laura Miele publicly praised generative AI tools, coinciding with a third wave of staffing layoffs across the publisher's offices .
