By Sagar V. Mankar Microsoft has announced another round of layoffs in its gaming division, affecting 650 employees which is 3% of that division. This round of job cuts is particularly significant, considering it comes on the heels of Microsoft’s $69 billion acquisition of Activision Blizzard in October 2023.
Phil Spencer, Microsoft’s head of gaming, informed employees about the job cuts in an email, framing them as part of the company’s post-acquisition restructuring efforts.
The majority of the affected positions are in corporate and support functions, primarily impacting Activision Blizzard employees as per Stephen Totilo of Game File.
This isn’t the first time Microsoft has cut jobs in its gaming division this year. In January, they laid off 1,900 workers across different parts of their gaming business, including Xbox, ZeniMax/Bethesda, and Activision Blizzard. That round of cuts even led to the cancellation of at least one game project at Blizzard.
However, this time around, Spencer made it clear that no games, devices, or experiences will be canceled because of these layoffs. Also, none of the top leaders in the Xbox team or other gaming teams will lose their jobs.
The gaming industry has seen a wave of layoffs since last year, particularly among companies that expanded rapidly during the pandemic-driven boom. Sony’s PlayStation, Riot Games, Bungie, Ubisoft, Rocksteady, and other major players have all announced significant job cuts, indicating a broader trend of restructuring and cost-cutting measures across the sector.
Spencer had talked about the earlier layoffs in February, saying they were necessary to keep Microsoft’s gaming team on track with the company’s overall goals. He mentioned that he needs to make sure the Xbox business is profitable and growing, which means having the right number of people in the right places.
Looking ahead, Microsoft expects its gaming revenue to grow by about 35% in the next few months, with 40% of that growth coming from Activision Blizzard. This suggests that without Activision Blizzard, Microsoft’s gaming revenue might actually go down.
Despite these challenges, Microsoft as a whole is doing well financially. The company made $109 billion in operating income for the year ending June 30, 2024, which is more than the year before.
Microsoft has some big game releases planned for this fall, including Call of Duty: Black Ops 6 from Activision. This game is expected to be one of the biggest of the year.
In his message to employees, Spencer acknowledged that this news is difficult to hear. He expressed gratitude for the contributions of those losing their jobs and outlined the support they’ll receive, including severance pay, extended healthcare, and help finding new jobs.
Spencer emphasized that these changes are meant to set up the gaming division for long-term success. He mentioned that while no games or studios are being cut, some teams might be affected as they adjust to changing priorities and manage their games’ performance.
He ended his message on a hopeful note, reminding his team that they’ve faced challenges before and have always come together to support each other and continue delivering great experiences for players.