The Igloo — Day Two: id Software Halved, Obsidian Gutted, Dawnwalker Rises
La ola de despidos de Xbox sigue: id Software habría perdido la mitad de su equipo, Obsidian un cuarto. Mientras tanto, Blood of Dawnwalker recibe los mejores reviews de avance de 2026, Meta lanza una app para crear juegos con IA, y la petición 'No maten el disco' supera las 170,000 firmas.
Tuesday, July 7, 2026. The dust from yesterday's Xbox reset didn't settle overnight — it got heavier.
The lead · The damage report: id Software, Obsidian, IO Interactive
Yesterday we covered the headline: 3,200 jobs cut, five studios out of the Xbox umbrella. Today the specific numbers are coming in, and they are brutal.
id Software — the studio behind Doom, Quake, and Wolfenstein — reportedly lost around half its development team. This is happening two days after Doom: The Dark Ages launched its first DLC. Doom co-creator John Romero responded on social media: "I know how devastating it is, and my heart's with all of you." He added that he hopes someone inside Microsoft is actively preserving the studio's source code history.
Obsidian Entertainment — the studio behind Fallout: New Vegas, The Outer Worlds, and a "huge list of projects" that staff say they now can't figure out how to continue — reportedly lost 60-70 developers, roughly 25% of its team. The irony is stark: Xbox is refocusing on Fallout as a priority franchise, and it just cut a quarter of the studio most associated with what made Fallout good.
IO Interactive (Hitman, Bond) regained full ownership of its fantasy RPG Project Fantasy from Xbox — but the cost was closing its Istanbul studio and laying off the developers there. The game will continue; those people are out of work.
The Elder Scrolls Online team reportedly lost "as much as half" its staff. Its roadmap is being re-evaluated — and Season One launches in two days.
Why this matters to players
The IPs Xbox is "protecting" — Fallout, Elder Scrolls, Doom — are not abstract brand names. They're the accumulated craft of the specific people who built them. You don't keep the soul of Doom by halving the team that figured out what Doom feels like in 2026. And for players waiting on sequels to Fallout: New Vegas, Dishonored, or Prey, the answer is becoming clearer: the people who could make those games are leaving.
Xbox CEO Asha Sharma's public statement is "We simply spread ourselves too thin." Industry experts are reading something less tidy behind it: one analyst cited "catastrophic mismanagement and AI gambits" — bets on AI as a cost lever that never produced a concrete game. Microsoft spent an estimated $80 billion on the Game Pass strategy. The CEO now admits it didn't work.
Sources: Game Developer — id Software cuts · IGN — Obsidian impact · RPS — IO Interactive closing Istanbul · Eurogamer — ESO cuts · GameSpot — $80B Game Pass admission
Blood of Dawnwalker is getting the most excited previews of 2026
Not everything in gaming today is a disaster. Blood of Dawnwalker, the open-world vampire RPG from former The Witcher 3 developers, gave press a four-hour hands-on — and the reaction from Eurogamer, IGN, and VGC is surprisingly unanimous: this might be the year's breakout RPG.
In four hours, press got to be a vampire, a detective, and a "witch lover." The tone is ambitious — part gothic horror, part character-driven mystery, built around a time-pressure mechanic where daylight costs you story options. Eurogamer called it "the makings of being 2026's breakout RPG." VGC said it "instantly became one of my most anticipated games."
The studio, Rebel Wolves, is independent — no publisher safety net, just a team of people who worked on The Witcher trying to make the game they want to make. After a day of reading about what corporate gaming looks like when it fails, that context hits differently.
Sources: Eurogamer — four-hour preview · IGN — preview · VGC — preview
Meta launches Pocket — make games with AI, no code required
Meta's Pocket is a new app for making games using generative AI — no programming experience required. You describe what you want, and the app builds it. Zuckerberg demoed it; the games look simple but functional.
The timing is interesting. Meta shut down multiple game companies earlier this year and is now leaning into AI-generated game creation instead. The message seems to be: the old way of building games (expensive studios, big teams) is being replaced by tools that let one person do what used to take dozens.
Final Fantasy artist Yoshitaka Amano pushed back on this narrative today, telling Polygon that AI can't replace human creativity — specifically the "emotional decision" behind each choice an artist makes. He's not wrong. He's also 75, has been making art for 50 years, and his work defines what Final Fantasy looks like. Both things can be true: AI tools will lower the floor for who can make games, and that doesn't mean the ceiling changes.
Sources: Polygon — Meta Pocket · Polygon — Yoshitaka Amano on AI
Sony's disc petition hits 170k — Kojima says it's "frightening"
The "Don't Kill the Disc" petition against Sony's move away from physical media has crossed 170,000 signatures. Sony has gone quiet. Hideo Kojima weighed in: he called the lack of media ownership "frightening" and said he's "really sad" about where this is heading.
Industry experts speaking to Eurogamer framed it plainly: "This is all about control." A disc-free PlayStation 6 would mean Sony sets the price for every game, every time, forever. No used market, no lending, no library — and no games the moment a server goes dark.
Sources: Eurogamer — petition count · Eurogamer — Kojima quote · Eurogamer — industry expert analysis
One more thing
Every single Japanese football team — all 60 clubs across J-League divisions — just got its own official Pokémon partner. Japan is genuinely operating at a different level of Pokémon integration than the rest of the world, and honestly? Respect.
The Igloo is The Penguin Alley's daily gaming show — fast, curious, no hype. Listen to today's episode.