Recent Xbox layoffs significantly impacted ZeniMax Online Studios, the developer of Elder Scrolls Online, with reports indicating roughly half the studio's workforce was affected. While no studios were formally shuttered, the cuts have inflicted considerable damage to team morale and disrupted long-standing development structures. Former content designer Andrew Young publicly expressed frustration over the decision, describing the emotional weight and creative toll on developers who have worked on the franchise for over a decade.

Young's critique centred on the disconnect between ESO's profitability and resource constraints. He stated the team consistently lacked sufficient funding despite the game generating revenue that subsidised other company projects, making it difficult to maintain planned release schedules. Elder Scrolls Online has experienced a complicated lifecycle since its 2014 launch—initially poorly received but revitalised by the Tamriel Unlimited model—though it has remained eclipsed by larger competitors in the MMO space.