Microsoft is set to lay off approximately 650 employees from its gaming division, according to an internal email from Phil Spencer, the head of gaming at Microsoft. These layoffs come in the wake of Microsoft's $69 billion acquisition of Activision Blizzard in October 2023. Spencer explained that the cuts, primarily affecting corporate and support roles, are part of aligning the post-acquisition structure and ensuring long-term business success.
Most of the impacted roles are within Activision Blizzard, and Spencer emphasized that no games, devices, or experiences will be cut. Additionally, no business unit leaders at Xbox or its affiliated gaming teams will lose their positions, suggesting that the layoffs are focused on streamlining operations rather than affecting core creative functions.
A Difficult Decision Amidst Industry Changes
Spencer’s email framed the layoffs as necessary for positioning Microsoft Gaming for sustainable future growth. The decision aligns with the broader industry trend of tech and gaming companies making significant layoffs to manage costs and adapt to post-pandemic market realities. Earlier this year, Microsoft’s gaming division saw 1,900 job cuts across Xbox, ZeniMax/Bethesda, and Activision Blizzard.
Impact on Activision Blizzard and Future Outlook
The latest layoffs mainly target corporate and support roles at Activision Blizzard, hinting at a strategic shift in resource allocation. With no projects being canceled and no leaders cut, the restructuring aims to refine Microsoft’s approach to managing its expanding portfolio, especially following the massive acquisition.
Spencer acknowledged the challenge of these changes but expressed confidence in the team’s resilience, highlighting the importance of supporting those impacted through severance and outplacement services.