Microsoft is cutting jobs across its gaming division, impacting roughly 8% of the 22,000 employees working under the Xbox and Activision Blizzard banners.
In total, 1,900 roles are being removed in a move to “align on a strategy” and sustainable spending, according to an internal memo.
Which Teams Are Impacted by the Layoffs?
While the bulk of the layoffs are aimed at Activision Blizzard, some Xbox and ZeniMax staff will also be let go.
Microsoft Gaming CEO Phil Spencer stated the “painful decision” was made after assessing areas of overlap and opportunities for efficiency between the various gaming subsidiaries now under the Microsoft banner.
The layoffs span multiple development teams, shared services groups, and corporate functions throughout the division. This indicates the cuts are broad in scope rather than targeting any single studio or franchise.
Why Is Microsoft Reshaping Its Gaming Business?
Microsoft finalized its massive $68.7 billion acquisition of Activision Blizzard in October 2023.
This merger combined Xbox Game Studios with Activision, Blizzard, and King to create a gaming juggernaut.
However, running this expanded empire efficiently requires strategy alignment and cost structure evaluation.
That often leads to workforce reductions as management identifies overlapping roles or projects not sustaining growth.
While painful, Microsoft likely sees this as a needed reset to build a leaner, more focused gaming business for the future.
How Will This Impact Upcoming Games and Services?
Fortunately, it does not appear any major game cancellations are tied to the layoffs.
The lone exception is Blizzard’s undisclosed survival title, which will be shuttered.
Otherwise, Microsoft stresses that reducing costs now will allow them to “bring more games to more players” across more platforms.
So this could enable investing more into key franchises and services like Call of Duty, Overwatch 2, and Game Pass.
What Other Big Exits are Happening?
Alongside the wider layoffs, Blizzard President Mike Ybarra and Chief Development Officer Allen Adham both elected to leave the company.
Ybarra was a former 20-year Microsoft veteran who helped oversee the merger but has now decided to move on.
Meanwhile, Adham co-founded Blizzard nearly 30 years ago, so his departure marks the end of an era.
Both execs made massive contributions to Blizzard’s games and culture over the decades.
What Comes Next for Microsoft’s Gaming Division?
Leaner yet laser-focused seems to be the goal.
A new Blizzard president will be named shortly, while Xbox head Phil Spencer oversees the broader gaming strategy.
Microsoft will look to build on Activision Blizzard’s strengths in mobile (King), PC (Blizzard), and console (Call of Duty) to propel further growth.
More mergers and acquisitions also can’t be ruled out as Microsoft continues to aggressively expand its gaming footprint under CEO Satya Nadella.
Related – This week, Riot Games, known for popular titles such as “League of Legends” and “Valorant,” also announced laying off 530 employees (11% of its workforce).
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