id Software's Collapse Exposes How Minecraft Was Quietly Keeping Xbox Studios Alive
Key takeaways
- Roughly 50% of id Software's workforce was cut as part of Xbox CEO Asha Sharma's broader 'reset,' with 136 confirmed roles eliminated in Texas.
- John Carmack stated id was a 'marginal business' for Microsoft and believes Minecraft revenues were subsidizing multiple Xbox studios for years.
- Despite critical acclaim for the Doom reboot series, Carmack's assessment implies the games never achieved the commercial scale Microsoft ultimately required.
The gaming industry received another gut punch this week as id Software, the legendary studio behind Doom and Quake, saw roughly half its workforce wiped out in a sweeping round of Microsoft layoffs. A WARN notice filed in Texas confirmed 96 in-office workers in Richardson — id's home base — were let go, alongside 40 remote employees. The cuts form part of a broader 'reset' ordered by new Xbox CEO Asha Sharma, which began Monday with 1,600 Microsoft gaming staff losing their jobs, with another 1,600 expected to follow before the financial year closes.
John Carmack, who co-founded id Software in 1991 alongside John Romero, Tom Hall, and Adrian Carmack, broke his silence on the situation via social media. Rather than expressing outrage, Carmack offered a measured but sobering take: id Software had become a 'marginal business' within Microsoft's colossal financial footprint — a company that generated $281.72 billion in revenue last fiscal year. Carmack also indicated he believed reports suggesting that Minecraft revenues had been quietly propping up multiple Xbox studios, including id, for years.
The layoffs arrive despite a string of critically praised titles from id. The 2016 Doom reboot revitalized the franchise, Doom Eternal in 2020 drew widespread acclaim, and this year's Doom: The Dark Ages was similarly well-received. Yet critical praise and commercial performance are two very different metrics. Carmack's sharpest observation — that 'games need to succeed, not just be beloved' — implies that fan enthusiasm alone was never enough to justify id's long-term position within Microsoft's portfolio.
The revelation about Minecraft's role as a financial safety net for Xbox studios is particularly striking. Many large entertainment conglomerates operate this way, relying on one or two blockbuster properties to subsidize riskier or smaller-scale creative work. For years, Minecraft may have been filling that role inside Microsoft's gaming division, effectively buying time for studios like id to develop mid-tier shooters that never hit Call of Duty-level sales figures. That arrangement now appears to be over.
What comes next for id Software remains genuinely uncertain. Reports indicate the studio had been exploring new directions — including a John Wick-inspired original IP, a new take on Perfect Dark, and a co-op Doom experience — before the axe fell. John Romero has publicly urged the industry to preserve id's recent legacy, calling Doom, Quake, and Wolfenstein 'not easy names to carry on.' Whether any version of id Software survives to develop new games, or whether it gets folded into a support role for other Microsoft properties, remains to be seen.
The bigger picture
Carmack's framing of id Software as a 'marginal business' is both honest and heartbreaking, but it also reveals something uncomfortable about how the games industry has evolved. When a studio that produced two universally praised Doom games inside of a decade still can't justify its own existence within a parent company's balance sheet, the definition of 'success' has clearly been reset to an almost unachievable standard. The middle tier of game development — quality studios making quality games for passionate but not mass-market audiences — is being systematically squeezed out, and id's fate may be the most high-profile casualty of that trend yet.
The Minecraft subsidy angle deserves more scrutiny than it has received so far. If one game from 2011 has been keeping Xbox's creative risk-taking alive for over a decade, Microsoft's gaming strategy was always more fragile than its acquisition spree suggested. The $68.7 billion Activision Blizzard purchase was supposed to give Xbox the kind of recurring revenue engines it needed — Call of Duty, Diablo, Overwatch. But those integrations take time, and in the interim, studios like id apparently existed at Minecraft's pleasure. Now that Microsoft seems unwilling to continue that arrangement, the creative diversity of Xbox Game Studios looks far thinner.
Investors and industry observers should watch closely what happens to id's intellectual property. Doom, Quake, and Wolfenstein are among gaming's most valuable legacy franchises, and Microsoft will not simply abandon them — but how they're managed going forward signals everything. If these IPs get handed to external developers or reduced to remasters and mobile ports, it would mark a fundamental shift in how Xbox views creative ownership. The next six months of announcements — or silence — will tell readers everything about whether Microsoft still believes in original, developer-led game creation or has quietly pivoted to IP licensing dressed up as a games business.
We felt this story demanded coverage not just because id Software is iconic, but because what's happening here is a microcosm of a much larger crisis in the gaming industry. The conversation around John Carmack's comments cuts deeper than a routine layoff story — it forces us to ask what 'success' actually means when a studio can make genuinely great games and still get gutted. At LagPing, we cover the business of gaming as seriously as we cover the games themselves, because the decisions made in boardrooms shape what players actually get to experience. The Minecraft-as-lifeline detail is the kind of structural revelation that rarely makes it out of industry insider circles, and we think it deserves wider attention. We're also keeping a close eye on where id's talent lands and what Microsoft does with the Doom franchise from here — both of which will matter enormously to the shooter genre's future. This isn't just a sad story about layoffs; it's a case study in how the economics of modern AAA development may be incompatible with the kind of mid-scale creative work that has defined gaming's best decades.
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