Microsoft Gaming Has Laid Off 2,550 Employees Since its Acquisition of Activision Blizzard in 2023

Microsoft has announced an additional 650 job cuts in its gaming division. These layoffs primarily affect corporate and support roles, as revealed in a memo from Xbox chief Phil Spencer, cited by IGN. This decision is part of Microsoft's ongoing efforts to restructure its gaming business following the acquisition of Activision Blizzard last year.

Phil Spencer reassured employees that no games, devices, or studios would be cancelled or closed due to these layoffs. Instead, the focus is on reorganising the business to ensure long-term success. Spencer mentioned that these changes would help the company support its game studios and business units more efficiently.

Impact on Xbox Business

Despite the challenges faced by other parts of Microsoft's Xbox business, such as declining hardware sales, the overall revenue of the gaming division has grown. This growth is mainly attributed to Activision Blizzard's contribution. Microsoft has even released some exclusive games on rival platforms like PlayStation to generate additional revenue.

The company is also gearing up for several new releases, including Call of Duty: Black Ops 6 and new Xbox consoles. These upcoming products are expected to bolster the company's position in the gaming market.

Restructuring Efforts

Since acquiring Activision Blizzard for $69 billion in 2023, Microsoft has been making adjustments to its gaming teams. The latest job cuts follow an earlier round this year when 1,900 employees were let go. In total, 2,550 jobs have been cut from Microsoft's gaming division since the acquisition.

Microsoft's gaming business continues to evolve with a focus on making games available across consoles, PCs, and cloud platforms. While these layoffs are challenging, Spencer believes they are necessary for ensuring future growth and success.

Phil Spencer's Memo

Here's the full memo sent by Phil Spencer (via IGN):

For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming — mostly corporate and supporting functions — to organize our business for long term success. I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the U.S., we're supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the U.S. packages will differ according to location. With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today. Throughout our team's history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.

Support for Affected Employees

Spencer acknowledged that this news is difficult for those affected by it. He expressed gratitude for their contributions and outlined support measures in place for impacted employees in the U.S., including severance packages, extended healthcare benefits, and outplacement services. Support packages outside the U.S. will vary based on location.

The restructuring aims to align corporate resources with sustainable future growth while better supporting studio teams with scalable programs and resources. Some teams will face impacts as they adjust priorities and manage game lifecycles. The gaming division remains focused on delivering quality experiences across various platforms despite these organisational changes.