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Xbox Layoffs Gut Studios, Palworld 1.0, Sony Disc Backlash

Jul 7, 2026 — Jul 14, 2026 · 7d ago

The video game industry experienced a week of massive upheaval as corporate restructuring collided with passionate player pushback. While Microsoft's sweeping layoffs forced major studio pivots and project cancellations, Sony faced intense scrutiny over its plans to phase out physical media. Meanwhile, major releases like Palworld and the Assassin's Creed IV: Black Flag remake proved that player demand remains incredibly high despite corporate turbulence.

Xbox Layoffs Force Fallout Pivot and Devastate Bethesda Studios

Xbox CEO Asha Sharma points the finger at Xbox's previous strategy for yesterday's sweeping layoffs: 'We simply spread ourselves too thin' Doom developer id reportedly cut in half as part of Xbox layoffsPC GamerThe Verge

Xbox CEO Asha Sharma defended laying off 3,200 employees through fiscal year 2027, pointing to a failed strategy that spread the company too thin PC GamerDigital FoundryGamesIndustry.biz. The sweeping cuts hit id Software, which reportedly lost half of its staff on the exact day it launched its DOOM: The Dark Ages - Revelations expansion The VergePure XboxEurogamer. Obsidian Entertainment also lost roughly a quarter of its workforce, resulting in the cancellation of Avowed 2 and other unannounced projects to pivot to a new Fallout game under director Josh Sawyer VGCThe VergePC GamerIGN.

Bethesda Game Studios staff warn that The Elder Scrolls VI faces substantial delays and potential crunch after losing over 50 key employees, prompting the OneBGS union to plan protest marches Push SquareIGNEurogamerVGC. ZeniMax Online Studios lost up to half of its team, forcing an immediate revision of the roadmap for The Elder Scrolls Online VGCGame DeveloperPure XboxEurogamer. Additionally, Halo Studios reportedly cancelled a multiplayer project codenamed Ekur Eurogamer.

As part of the restructuring, Compulsion Games successfully negotiated its independence from Xbox Game Studios IGN. Adding to the controversy, Sharma was appointed by the United States Federal Reserve to co-lead its new Productivity and Jobs task force, drawing intense scrutiny from the gaming community GamesIndustry.bizVGCEurogamer.

PlayStation Fans Protest Sony Plans to End Physical Game Discs

The petition against Sony's decision to kill PlayStation physical discs has over 170,000 signaturesBacklash Against Sony's Disc-Free Future Continues as Petition Passes 200,000 SignaturesEurogamerPush Square

Sony Interactive Entertainment is facing massive backlash following its announcement that it will cease manufacturing physical PlayStation discs by January 2028 EurogamerVGC. The "Don't Kill the Disc" online petition has rapidly surpassed 200,000 signatures, with prominent industry figures like Hideo Kojima voicing concerns over the loss of physical media Push SquarePush Square.

While the European Union confirmed it cannot legally intervene, the Entertainment Retailers Association and consumer advocacy groups are actively fighting the transition to a digital-only ecosystem EurogamerThis Week in Video GamesPC Gamer. Amidst the outcry, Santa Monica Studio confirmed that the upcoming God of War Laufey will receive a physical disc release and launch in 2027, beating the production deadline VGCPush SquareEurogamer.

Palworld 1.0 and Assassin's Creed Black Flag Resynced Break Steam Records

Two Games Are Getting New Additions Today On Xbox Game Pass (July 10)Palworld sees huge surge in concurrent players after the release of Version 1.0Pure XboxVGC

Pocketpair officially brought its hit survival game Palworld out of Early Access with the launch of version 1.0 on PC and Xbox Game Pass Pure XboxGamingOnLinux. The release triggered a massive player surge, reaching a weekend peak of nearly 900,000 concurrent players on Steam VGCEurogamerPC Gamer. To prevent game-breaking compatibility issues, the developer warned returning players to completely delete old mods GamingOnLinuxPC Gamer.

Ubisoft's ground-up remake Assassin's Creed Black Flag Resynced also enjoyed a massive launch on PC, PlayStation 5, and Xbox Series X/S, selling over two million copies on day one and peaking at 100,000 concurrent Steam players Digital FoundryEurogamerPC Gamer. However, the single-player pirate adventure faced review bombing over the inclusion of microtransactions and day-one DLC, alongside criticism of layoffs at co-developer Ubisoft Barcelona EurogamerRock Paper ShotgunPush Square.

Nintendo Switch 2 Gets New Battery Model as Original Switch Discontinues in Europe

Nintendo confirm replaceable battery EU Switch 2 model, end of Switch 1 productionNintendo confirms Switch 1 consoles will be withdrawn from Europe following EU law change on batteriesDigital FoundryGamesIndustry.biz

Nintendo confirmed it is developing a revised model of the currently available Nintendo Switch 2 featuring user-replaceable batteries to comply with upcoming European Union sustainability regulations Digital FoundryGamesHub. Concurrently, the company announced that production of the original Nintendo Switch, Switch Lite, and Switch OLED models for the European market will cease entirely by mid-February 2027 Digital FoundryGamesIndustry.bizEurogamer.

Developers continue to support the Switch 2, with Ubisoft announcing The Crew Motorfest for October 8, Square Enix bringing Octopath Traveler and its sequel on October 1, 2026, and Sega shadow-dropping Sonic Frontiers - Definitive Edition Nintendo LifeNintendo LifeNintendo Life.

EA Sports Removes College Football 27 Microtransactions Amid Player Boycotts

College Football 27 to Remove Single Player Microtransactions After Fans Threatened Boycott College Football 27 to remove microtransactions after player backlash, though EA maintains they were only added to 'give players more choice' Push SquarePC Gamer

Following intense community backlash and boycott threats, EA Sports announced the complete removal of paid progression options and microtransactions from College Football 27's single-player modes Push SquareIGN. The publisher admitted it missed the mark with the monetization design and committed to greater transparency moving forward Push SquarePC Gamer.

Activision's shadow-dropped PlayStation 5 and PlayStation 4 ports of Call of Duty: Black Ops and Call of Duty: Black Ops II surged in popularity but faced heavy criticism for their £35 ($40) price tag and rampant multiplayer hackers Pure XboxPush Square. Meanwhile, speedrunning charity Games Done Quick abruptly cancelled its partnership with SNK for a Metal Slug stream due to community backlash over SNK's majority ownership by a Saudi Arabian foundation EurogamerTime Extension.