In recent news that has sent ripples across the gaming world, Microsoft announced major layoffs within its video game division. This move comes as a surprise, especially following the company’s massive acquisition of Activision Blizzard for US$69 billion.
The layoffs, affecting about 1,900 roles, represent a nearly 9% reduction in Microsoft’s 22,000-person video game division. This decision will primarily impact Activision Blizzard, known for blockbuster titles like “Call of Duty” and “Guitar Hero,” but will also affect employees at Xbox and ZeniMax. Despite the scale of these layoffs, they account for less than 1% of Microsoft’s total workforce of approximately 220,000 employees.
Phil Spencer, the head of Microsoft Gaming, communicated this decision in a memo, emphasizing the need for strategic planning and expressing empathy for the affected employees. The memo highlighted the integration of Activision, Blizzard, and King teams into Microsoft’s fold and outlined a strategy aimed at sustainable growth.
Furthermore, these layoffs are not isolated to Microsoft. The gaming industry at large is experiencing a wave of job cuts. Tencent’s Riot Games, for instance, announced a reduction of 11% of its workforce, while Amazon’s Twitch is planning a 35% workforce reduction. Unity Software is also looking to cut a quarter of its staff. This trend of layoffs in the gaming industry seems to be a reaction to the changing market dynamics as the pandemic-driven surge in gaming starts to recede.
In the midst of these layoffs, there have been notable leadership changes within Microsoft’s gaming divisions. These include the departure of Blizzard’s president Mike Ybarra and chief design officer Allen Adham. Ybarra, a key figure in the Activision Blizzard acquisition process, leaves after over two decades with Microsoft. Adham, a co-founder of Blizzard, had a significant impact on the company’s games and plans to continue mentoring young designers in the industry.
Despite these challenges, Spencer remains optimistic about the future of Microsoft’s gaming business. He stresses the company’s commitment to continued investment in areas that will expand their reach to more players globally. The gaming division, a key component of Microsoft’s consumer business, generated over US$15 billion in annual sales, mainly under the Xbox brand.
This restructuring within Microsoft’s gaming division reflects the evolving landscape of the gaming industry, where companies are reassessing their strategies in response to changing market conditions and consumer habits
