The news was announced by Xbox head Phil Spencer in a blog post put out this morning, which wasn't exactly chock-full of details but was full to the brim with hype:
"As one of the largest, most critically acclaimed, privately held game developers and publishers in the world, Bethesda is an incredibly talented group of 2,300 people worldwide who make up some of the most accomplished creative studios in our industry across Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane, MachineGames, Tango Gameworks, Alpha Dog, and Roundhouse Studios. These are the teams responsible for franchises like The Elder Scrolls, Fallout, Wolfenstein, DOOM, Dishonored, Prey, Quake, Starfield and many more."
To offer a smidge more clarity, soon afterward Bethesda posted their own blog post detailing why they thought they'd be a perfect fit in Microsoft's growing stable of first-party developers:
So why the change? Because it allows us to make even better games going forward. Microsoft is an incredible partner and offers access to resources that will make us a better publisher and developer. We believe that means better games for you to play. Simply put - we believe that change is an important part of getting better. We believe in pushing ourselves to be better. To innovate. To grow.
And, we have a long history of working with Microsoft. Our companies share many of the same basic principles. We believe in a culture that values passion, quality, collaboration, and innovation. When I think back to the first time we decided to shift from being a PC-only developer and make Morrowind for the original Xbox, it was a move that countless people said would never work…nobody on consoles wanted a game that big and complex. But Microsoft believed in us and so did you. And now RPGs of all shapes and sizes are hugely successful on consoles.
The most immediate concern people will have, of course, is what this means for PlayStation and Switch projects that Bethesda has been, or might have been working on. Sadly, that's a detail we don't know much about yet, but if it's any consolation it appears the highly-anticipated PS title "Ghostwire" is still happening, but... that's liable to change anytime.
We'll have to keep an eye on this as more details emerge.
Update: Microsoft has commented that it will commit to releasing both Ghostwire and Deathloop on the PlayStation 5.