Bethesda might be about to solve one of gaming’s longest-running debates. Instead of ditching Creation Engine for Unreal, the studio is reportedly building a hybrid system that combines the best of both worlds. According to Windows Central editor Jez Corden, Microsoft is bringing serious technical firepower to help modernize Bethesda’s aging engine infrastructure.
The rumor surfaced following a secret Bethesda event where the studio reportedly showcased major upgrades coming to Starfield in 2026. But the real story isn’t just about one game getting fixed. It’s about Microsoft fundamentally transforming how Bethesda builds games going forward, with potential implications for The Elder Scrolls VI and Fallout 5.
The Coalition and Microsoft ATG Are Leading the Charge
This isn’t just Bethesda tinkering with code on their own. Microsoft’s Advanced Technology Group is reportedly collaborating with The Coalition, the studio behind Gears of War and one of Microsoft’s most technically proficient teams. The Coalition has deep expertise with Unreal Engine 5, having worked directly with Epic Games on advancing the engine’s capabilities.
Kate Rayner, technical director at The Coalition, has overseen some of the most visually impressive Xbox games in recent years. Her team’s involvement suggests Microsoft is taking Bethesda’s technical challenges seriously and deploying top-tier engineering talent to solve them.
The collaboration appears focused on integrating specific Unreal Engine features into Creation Engine rather than replacing it entirely. This approach preserves the unique systems that make Bethesda games special while addressing the engine’s well-documented limitations with modern rendering, animation, and performance optimization.
What Features Are Getting the Unreal Treatment
While specific technical details remain scarce, the integration likely focuses on several key areas where Unreal Engine 5 has made significant advances:
- Rendering pipeline improvements – Better lighting systems, potentially incorporating technology similar to Unreal’s Lumen global illumination
- Animation tools – More sophisticated character movement and facial animation systems, possibly including motion matching capabilities
- Asset streaming – Improved data loading to reduce the loading screens that have plagued Bethesda games for years
- User interface enhancements – Modernizing the internal creation kit to make development more efficient
- Pathfinding and AI systems – Better NPC behavior and navigation through complex environments
Todd Howard previously mentioned that Creation Engine 2 received significant upgrades for Starfield, calling it the biggest engine overhaul since Morrowind to Oblivion. This new Unreal integration appears to be the next evolution of that technical transformation.
Starfield 2.0 as the Proving Ground
The rumored Starfield 2.0 update scheduled for 2026 is apparently serving as a prototype for these engine improvements. Bethesda held a closed-door event recently, allegedly led by Todd Howard himself, where attendees saw major changes to the game’s space exploration systems.
Sources who attended the event described substantially improved space flight mechanics that reduce reliance on loading screens. The goal is creating a more continuous, free-form exploration experience similar to what players expected at launch. These technical upgrades to facilitate seamless space travel will reportedly carry forward to future Bethesda titles like The Elder Scrolls VI.
However, not everyone who saw the presentation came away equally impressed. Some sources downplayed the scope of changes, cautioning against expecting a full Cyberpunk 2.0-style reinvention. Others were far more enthusiastic about the content shown. This split reaction suggests the update might be substantial but perhaps not the complete game overhaul some fans are hoping for.
Why Not Just Switch to Unreal Completely
The gaming community has debated for years whether Bethesda should abandon Creation Engine for Unreal. Several former Bethesda developers, including Nate Purkeypile, have publicly suggested the studio should make the switch. CD Projekt Red famously moved from their proprietary REDengine to Unreal Engine 5 for future Witcher games, citing easier recruitment and standardized workflows.
But Bethesda has unique technical requirements that make switching engines problematic. Creation Engine was specifically designed to support massive open worlds with thousands of persistent objects, extensive NPC schedules, and deep modding capabilities. These systems are fundamental to what makes Elder Scrolls and Fallout games feel alive and reactive.
Former studio lead Dan Nanni explained that ditching Creation would impose significant costs on both the development team and the modding community. Decades of accumulated tools, knowledge, and workflows would become obsolete. The extensive modding ecosystem that has kept Skyrim relevant for over a decade relies on Creation Engine’s specific architecture.
By integrating Unreal features into Creation Engine instead of switching entirely, Bethesda can modernize their technology while preserving what makes their games distinctive. It’s a hybrid approach that acknowledges both the engine’s strengths and weaknesses.
What This Means for Future Bethesda Games
If the Starfield 2.0 prototype proves successful, the implications for The Elder Scrolls VI and Fallout 5 could be massive. Both games have been in development for years, with Elder Scrolls VI recently confirmed to have early playable builds running. The timing suggests these projects could benefit significantly from the engine improvements being tested in Starfield.
Xbox reportedly wants Bethesda to accelerate Fallout 5’s development following the massive success of the Fallout TV series on Prime Video. However, sources indicate the studio is quite stretched trying to capitalize on that momentum while simultaneously supporting Starfield updates, developing Elder Scrolls VI, and managing live service games like Fallout 76.
A more capable, Unreal-influenced Creation Engine could help address those bandwidth issues by making development more efficient. Better tools, improved workflows, and modern rendering capabilities mean smaller teams can accomplish more in less time.
Frequently Asked Questions
Is Bethesda switching from Creation Engine to Unreal Engine?
No, Bethesda is not abandoning Creation Engine. According to rumors from Jez Corden, Microsoft is helping integrate specific Unreal Engine features into Creation Engine to modernize it while preserving its unique capabilities for open-world RPGs and modding support.
What is Microsoft’s Advanced Technology Group doing with Bethesda?
Microsoft’s Advanced Technology Group and The Coalition studio are reportedly collaborating with Bethesda to enhance Creation Engine with features inspired by Unreal Engine 5, focusing on rendering, animation, and performance improvements.
When is the Starfield 2.0 update coming?
The rumored Starfield 2.0 update is expected to arrive sometime in 2026. It reportedly includes major improvements to space exploration, reduced loading screens, and serves as a testing ground for broader Creation Engine upgrades.
Why doesn’t Bethesda just use Unreal Engine like CD Projekt Red?
Creation Engine has unique systems for persistent object tracking, NPC AI schedules, and modding support that are fundamental to Bethesda’s game design philosophy. Switching engines would require rebuilding these systems from scratch and would break compatibility with the extensive modding community.
Will The Elder Scrolls VI use the upgraded Creation Engine?
While not officially confirmed, the timing suggests Elder Scrolls VI will benefit from these engine improvements. The game is currently in development with early builds already running, and engine upgrades tested in Starfield 2.0 are expected to carry forward to future projects.
What is The Coalition’s role in this collaboration?
The Coalition, Microsoft’s Gears of War studio led by technical director Kate Rayner, has extensive Unreal Engine 5 expertise from working directly with Epic Games. They’re reportedly providing technical guidance and recommendations on implementing modern engine features into Creation Engine.
Does this mean Bethesda games will look as good as Unreal Engine 5 games?
The goal appears to be improving visual fidelity, performance, and development efficiency by adopting certain Unreal technologies. However, Creation Engine will remain distinct with its own strengths and limitations rather than becoming a complete Unreal clone.
The Bigger Picture
This collaboration represents exactly the kind of synergy Microsoft promised when acquiring Bethesda in 2020. Rather than forcing studios to abandon their identities, Microsoft is leveraging resources across its gaming division to solve technical problems and elevate game quality.
Whether this hybrid approach succeeds depends entirely on execution. Starfield’s troubled launch proved that engine upgrades alone don’t guarantee great games. But giving Bethesda access to cutting-edge Unreal technology while preserving what makes their games special could be the best of both worlds. We’ll find out in 2026 when Starfield 2.0 shows whether this gamble paid off.