Microsoft announces the initiation of major layoffs, cutting 1,900 jobs across its gaming division, and impacting Xbox, Activision Blizzard, and ZeniMax teams. Microsoft Gaming CEO, Phil Spencer, outlines the strategy, stating the decision aims at creating a sustainable cost structure. The layoffs come just three months after Microsoft’s $68.7 billion takeover of Activision Blizzard, signaling a significant shift in the gaming industry landscape in 2024.
Phil Spencer, the CEO of Microsoft Gaming, shared the news through an internal memo. The big idea here is that Microsoft wants to reshape its strategy to make sure it’s spending money wisely and growing in the right direction.
As we move forward in 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business.Spencer
Microsoft is making the tough decision to let go of about 1,900 people out of the 22,000-strong gaming team. The majority of these cuts will happen in the recently acquired Activision Blizzard, with some positions affected in the Xbox and ZeniMax teams. This equals around eight percent of Microsoft’s gaming division, showing that these changes are quite significant.
Phil Spencer took a moment to appreciate the contributions of those leaving, saying,
The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax, and the Xbox teams, and they should be proud of everything they’ve accomplished here.Spencer
One notable departure is Blizzard Entertainment President Mike Ybarra, who expressed his support for those affected, saying,
It’s an incredibly hard day, and my energy and support will be focused on all those amazing individuals impacted.President Mike Ybarra
This reinforces the fact that these decisions are tough for everyone involved.
Matt Booty, Microsoft’s game content and studios president, emphasized the company’s commitment to support those affected during the transition. He mentioned that Blizzard’s untitled survival game cancellation would be met with a shift of developers to other promising projects. This shows that Microsoft is trying to soften the impact as much as possible.
The restructuring also means saying goodbye to Blizzard’s untitled survival game, a project that could have been a big deal for the company. However, the developers originally assigned to this project are not being left hanging. They’re being redirected to other promising initiatives in the early stages of development, keeping their talents in play.
These kinds of workforce reductions are pretty normal after major mergers. It’s like putting together a giant puzzle, and sometimes you realize there are pieces that just don’t fit together. The impact isn’t only on Microsoft; the whole gaming industry is going through a similar wave of layoffs in 2024. Other big companies, like Unity, Twitch, Discord, Riot Games, and various game development studios, are also making significant changes to their teams.
Phil Spencer emphasized Microsoft’s gratitude towards the departing employees:
We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues. We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws.Phil Spencer
What does this all mean for Microsoft? The company wants to invest in areas that will help it grow and bring more games to players around the world. Despite the challenges, Phil Spencer expressed confidence in the team’s ability to continue creating and nurturing games, stories, and worlds that bring players together.
“Our esports business remains a key focus, and we are strategically considering its evolution to enhance the experience for our players and fans. Maintaining our dedication to competitive esports, we have chosen a model that aligns more closely with our game franchises,” stated Activision Blizzard to GamesBeat. “Esports is not being discontinued; rather, we are adjusting to a new business model to better cater to the community. Those directly affected have played crucial roles in our team’s and Activision Blizzard’s success. We appreciate their contributions and will extend comprehensive support, including severance, equity, bonuses, healthcare, and job assistance.”
The Communications Workers of America (CWA) stated to Engadget that none of its members were affected by the recent layoffs. The union, which advocates for hundreds of individuals within Microsoft’s gaming division, including approximately 300 quality assurance workers at ZeniMax and others at companies like Raven Software, provided this assurance.
In a statement made last June, Microsoft, in an effort to address regulatory concerns during its acquisition of Activision Blizzard, committed to maintaining a neutral position when employees covered by an agreement with the CWA express a desire to join a union. In support of this commitment, the CWA endorsed the proposed merger.
As the gaming industry goes through these changes, Microsoft’s move signals a period of transformation, with effects reaching beyond the company itself. The aftermath of these layoffs, coupled with the cancellation of Blizzard’s survival game, shows how complex the gaming industry is in 2024. This follows a trend of significant workforce adjustments in the gaming sector, highlighting the need for adaptability and strategic decision-making in an ever-evolving industry.
Last Update 1/26 1:57 PM ET: Confirmed by the CWA, none of its members were impacted by the layoffs.
Last Update 1/30 4:53 PM ET: Provided additional information regarding job cuts within the esports division of Activision Blizzard.