Microsoft has announced a new round of layoffs in its gaming division, cutting approximately 650 jobs primarily in corporate and support functions. This marks the third significant reduction in the Xbox unit this year, following 1,900 job cuts in January and the closure of four studios in May. The layoffs are part of Microsoft’s efforts to integrate its $69 billion acquisition of Activision Blizzard and streamline operations.Xbox chief Phil Spencer emphasized in an internal memo that ‘no games, devices or experiences are being cancelled, and no studios are being closed as part of these adjustments today’. Spencer stated that the decision was made ‘as part of aligning our post-acquisition team structure’ and organizing the business ‘for long-term success’.The move reflects broader industry challenges, including rising development costs and slower growth in consumer spending post-pandemic. Other major gaming companies such as Sony, Take-Two Interactive, and Electronic Arts have also implemented layoffs and project cancellations in recent months.Affected employees, particularly in the US, will receive severance packages, extended healthcare, and support for career transition. The impact on international employees will vary according to local laws.This restructuring comes at a time when Microsoft’s gaming revenues have increased, largely due to the Activision Blizzard acquisition, but sales of Xbox hardware have declined since last year. The company is under pressure to make its gaming division more profitable following the major acquisition, with Spencer noting, ‘We run a business… the bar is high for us in terms of the delivery we have to give back to the company’.
Key points
- Microsoft is laying off 650 employees from its Xbox division, the third round of cuts in 2024.
- No games, devices, or studios are being cancelled or closed as a result of these layoffs.
- The cuts are part of Microsoft’s efforts to integrate the $69 billion Activision Blizzard acquisition and improve profitability.
- This move reflects broader challenges in the gaming industry, including rising costs and slower consumer spending growth.
