Microsoft, one of the biggest players in the tech industry, recently made a shocking announcement regarding its gaming division. Three months after the acquisition of Activision Blizzard, Microsoft dropped a bombshell by revealing that it would be implementing major layoffs. This decision impacts a staggering 1,900 workers in the gaming division, which accounts for approximately 8% of all Microsoft Gaming employees. The cuts specifically target employees under the Activision Blizzard, Xbox, and ZeniMax banners, indicating the magnitude of the impact. Such a drastic measure was reportedly taken to establish a “sustainable cost structure” and eliminate any “areas of overlap” that could hinder the company’s growth in the future.
The memo shared internally by Microsoft Gaming CEO Phil Spencer shed light on the motivation behind these layoffs. In his message, Spencer talked about the need for aligning on a strategy and execution plan with a sustainable cost structure that can effectively support the overall growth of the business. Alongside Activision Blizzard’s leadership, Microsoft Gaming intends to prioritize and identify areas of overlap, making sure that everyone is on the same page when it comes to the best growth opportunities. Unfortunately, this process came with the painful decision to let go of approximately 1,900 employees out of the 22,000-strong team.
While these layoffs were made to optimize Microsoft’s operations and future prospects, it’s important to acknowledge the hard work and contributions of the affected employees. Phil Spencer made it a point to express gratitude for the creativity, passion, and dedication exhibited by these individuals during their tenure at Activision Blizzard, ZeniMax, and Xbox. These employees played an integral role in the success of these brands, and they should be proud of their accomplishments. Spencer also ensured that Microsoft would support those impacted by the transition and continue investing in the growth of the company while expanding its reach to more players worldwide.
One immediate consequence of the layoffs emerged from Blizzard, a subsidiary of Activision Blizzard. The restructuring led to the cancellation of one of Blizzard’s long-gestating games. Although details about the project remain scarce, it was known to be a survival-themed game that had been in development for several years. With work on the game now terminated, developers involved in the project were let go, while others were reassigned to different roles within the company. Blizzard president Mike Ybarra also decided to part ways with Microsoft. According to a memo from Matt Booty, Microsoft’s Game Content and Studios President, Ybarra’s departure was referred to as a natural decision, given that he had seen the acquisition through and was ready to explore new opportunities elsewhere. Additionally, Allen Adham, Blizzard’s Chief Design Officer, will be leaving the company as part of these organizational changes.
Microsoft’s decision to downsize its gaming division adds to a growing trend of layoffs in the gaming industry. In the early months of 2024, several prominent companies like Twitch, Discord, and Riot Games have also initiated their own rounds of cuts, resulting in a significant number of job losses within the games industry. This wave of layoffs not only impacts the individuals directly affected but also sends shockwaves throughout the entire industry, as talented professionals find themselves suddenly out of work.
Microsoft’s decision to implement major layoffs within its gaming division has sent ripples through the industry. With 1,900 employees affected, the company aims to establish a sustainable cost structure and eliminate areas of overlap to ensure future growth. As the gaming industry continues to evolve, it remains to be seen how these decisions will shape the landscape moving forward.
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