Xbox Layoffs, Sony Disc Backlash, Blood of Dawnwalker Previews
Jul 1, 2026 — Jul 8, 2026 · 13d ago
The video game industry is undergoing a seismic shift this week as corporate restructuring and digital transitions redefine the landscape for players and creators alike. From devastating layoffs at Microsoft to mounting consumer fury over Sony's plan to abandon physical media, the business of gaming is facing a turbulent reckoning. Yet, amid the corporate chaos, highly anticipated RPGs and high-profile remakes offer a glimmer of hope for the future of play.
Xbox Layoffs Gut id Software and Obsidian in Massive Restructure
Microsoft has initiated a historic downsizing of its gaming division, cutting 3,200 jobs—roughly 20% of its Xbox workforce—under new Xbox CEO Asha Sharma . The sweeping cuts have devastated internal studios, with Doom developer id Software losing half its staff on the launch day of its DOOM: The Dark Ages - Revelations expansion, and Avowed developer Obsidian Entertainment losing a quarter of its workforce . ZeniMax Online Studios was also hit hard, losing up to half its team and forcing an immediate re-evaluation of The Elder Scrolls Online roadmap .
As part of this pivot to a "franchise-centric" model focusing on core intellectual properties like Fallout and The Elder Scrolls, Microsoft is divesting from several key studios . Double Fine Productions and Compulsion Games are returning to independent status, while Ninja Theory and Undead Labs are being sold off, meaning Undead Labs' upcoming State of Decay 3 is no longer guaranteed for Xbox Game Pass . The restructuring has also severed external partnerships, forcing Hitman developer IO Interactive to regain independent ownership of its RPG Project Fantasy after Microsoft pulled funding, leading to the closure of IO's Istanbul studio . This massive contraction comes as Xbox Game Pass subscribers have reportedly plummeted to 30 million, down four million since 2024 .
Sony Faces Intense Backlash Over Ending PlayStation Physical Discs
Sony Interactive Entertainment has sparked widespread outrage after announcing plans to cease the production of physical 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 for the PlayStation 6 . Industry veterans, including legendary game director Hideo Kojima, have warned of a "frightening" future where players do not truly own their digital libraries .
In response, a "Don't Kill the Disc" petition on Change.org has rapidly amassed over 170,000 signatures, and Sony's social media channels have been flooded with hostile protests . Meanwhile, Microsoft is capitalizing on the controversy by explicitly marketing the upcoming physical release of Halo: Campaign Evolved on PlayStation 5 . To ease developer panic, Sony clarified that studios can still order physical disc batches after the 2028 deadline, provided their games launch before the cut-off date .
Nintendo Switch 2 Gets Replaceable Battery Model as Original Switch Discontinues
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 . This new model will feature user-replaceable batteries for both the main console and the revised Joy-Con 2 controllers, resulting in a minor 1% reduction in battery capacity and a slight weight increase .
On the software front, Square Enix shared technical details for the September release of Dragon Quest XI S: Echoes of an Elusive Age - Definitive Edition on the Switch 2, confirming dedicated "Performance" and "Quality" modes . Additionally, Good Smile Company announced that the party action game Hatsune Miku Starry Party is currently in development for PC and Nintendo Switch 2 .
The Blood of Dawnwalker Previews Tease a Game of the Year Contender
First hands-on previews for The Blood of Dawnwalker have painted an incredibly positive picture, with critics hailing the dark fantasy RPG as a potential Game of the Year candidate . Developed by Rebel Wolves—a studio founded by former CD Projekt Red veterans and led by The Witcher 3: Wild Hunt director Konrad Tomaszkiewicz—the vampire-themed adventure offers a highly reactive narrative sandbox . Previews of a four-hour gameplay demo praised the game's unique time-driven quest system, detective mechanics, and deep player choices, drawing favorable comparisons to the depth of The Witcher 3.
Marvel Tōkon Fighting Souls Blocked on Steam in Over 130 Countries
Sony is drawing heavy criticism from the PC gaming community after restricting the upcoming release of Marvel Tōkon: Fighting Souls on Steam . The fighting game has been blocked from purchase in 132 countries due to Sony's mandatory PlayStation Network (PSN) account linking policy . This decision has deeply frustrated players in regions without official PSN support, echoing the controversial region-locking issues that previously plagued Helldivers 2 on PC .
Assassin's Creed Black Flag Resynced Reviews Praise the Pirate Remake
The first reviews for Assassin's Creed Black Flag Resynced have dropped, with critics largely celebrating the return of Edward Kenway's pirate adventure on PC, PlayStation 5, and Xbox Series X/S . While some reviewers noted that the remake swaps the quirks of the original 2013 release for modern Ubisoft design conventions, most agreed that the core naval combat and sailing remain incredibly compelling . However, a few critics expressed disappointment, calling it a safe remake that fails to fully reinvent the classic stealth and parkour mechanics of the original .
Xbox Layoffs, Sony Disc Backlash, Blood of Dawnwalker Previews — Patchnotes
