The video game industry continues to reel from widespread layoffs in 2025, and now Virtuos, the co-developer behind The Elder Scrolls 4: Oblivion Remastered, is the latest to reportedly suffer mass job cuts. According to industry journalist Gauthier Andres, the studio is laying off roughly 7% of its global workforce a devastating blow that could affect up to 300 employees worldwide.
The report arrives at a time when multiple studios, especially those under the Microsoft banner, have already slashed jobs this year. Although Virtuos isn’t owned by Microsoft, its sudden layoffs seem to mirror the same troubling industry-wide trend: even well-performing games aren’t protecting developers from financial strain.
Virtuos has built a solid reputation over the years with a portfolio that includes Horizon Zero Dawn’s PC port, The Outer Worlds for Nintendo Switch, XCOM for iOS, and as a co-developer on Metal Gear Solid Delta. Most recently, it turned heads with Oblivion Remastered, which reportedly outsold the original and was widely praised by fans for preserving Bethesda’s classic while modernizing its visuals and performance.
Despite these successes, Virtuos employees may not have seen any royalty-based bonuses tied to Oblivion Remastered’s strong sales. According to Andres, the studio’s contract didn’t offer any back-end rewards. To make matters worse, the studio allegedly cut bonuses and froze raises after the project’s completion raising concerns among the staff that have now proven valid.
Per Andres’ sources, approximately 200 of the layoffs are affecting Virtuos’ operations in China, with an estimated 100 additional cuts across the U.S. and Europe. This news is especially jarring considering Virtuos had only recently opened a new studio in South Korea, signaling growth just months ago.
While an official statement has not yet been released by Virtuos, the lack of bonuses, raise freezes, and now global job cuts paint a grim picture of what’s happening behind the scenes even at studios with successful titles.
Adding another layer of controversy to the situation, Andres claims that Virtuos has been slowly integrating generative AI into its development pipelines. Though it remains unclear if the move to AI is directly linked to the layoffs, the timing is suspicious. Other major publishers, including Xbox, have been rumored to replace hundreds of human developers with AI and Virtuos may be following suit.
The implications of this shift are deeply concerning. As development costs skyrocket and AI tools become more powerful, there’s growing fear that even talented teams with proven track records may be viewed as expendable in favor of cheaper, automated alternatives.
Fortunately, the layoffs are not expected to impact the post-launch support for Oblivion Remastered or development of Metal Gear Solid Delta. But for the people behind those games, the situation is bleak. As more reports surface and statements emerge from former employees, the gaming industry may need to confront a brutal truth: financial success no longer guarantees job security for those who work in games. Which might be a big reason why indie games are becoming more common place.
Stay tuned to Gamefragger.com for more updates as they come.