Microsoft is laying off approximately 1,900 employees from its gaming division, primarily affecting roles at Activision Blizzard, but also impacting some positions at Xbox and ZeniMax. This development, which constitutes around 8% of Microsoft Gaming's workforce of 22,000, underscores the tech giant's efforts to realign its strategy and execution plan for sustainable growth.
According to an internal memo from Microsoft Gaming CEO Phil Spencer obtained by The Verge, the decision to reduce the workforce is part of a broader strategy to align priorities and eliminate areas of overlap following the integration of Activision, Blizzard, and King teams into Microsoft. The memo, addressed to the Microsoft Gaming division, emphasizes the importance of focusing on growth opportunities and aligning resources to support the business's overall trajectory.
Phil Spencer's memo acknowledges the contributions of the employees affected by the layoffs and assures full support during the transition period. He states, "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. We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues."
The layoffs come amid leadership changes within the gaming division. Blizzard president Mike Ybarra is leaving the company after guiding it through the acquisition process as Blizzard's president. Microsoft's game content and studios president Matt Booty announced Ybarra's departure in an internal memo, mentioning his two decades of service at Microsoft. Furthermore, Allen Adham, Blizzard's chief design officer and one of its co-founders, is also departing the company. Adham's influence on Blizzard's games is expected to be long-lasting, as he plans to continue mentoring young designers across the industry.
The restructuring also impacts Blizzard's game development pipeline. A previously announced survival game has been canceled, with the team members being reassigned to other early-stage projects at Blizzard.
This wave of layoffs occurs as the tech industry continues to face a challenging economic environment, with companies like Alphabet, eBay, and Amazon.com also announcing job cuts. Microsoft, which completed a $68.7 billion acquisition of Activision Blizzard in October after a 20-month regulatory battle, is adjusting its workforce to better position itself in the competitive gaming market. This acquisition was aimed at boosting Microsoft's presence in the gaming market, adding renowned titles like "Call of Duty" to its portfolio.
The announcement of these layoffs precedes Microsoft's fiscal Q2 2024 earnings report, which is expected to provide insights into the financial impact of the Activision Blizzard acquisition. The layoffs also follow significant leadership changes in the Xbox division, with Sarah Bond being promoted to Xbox president and Matt Booty overseeing Bethesda, ZeniMax studios, and Activision Blizzard as president of game content and studios.
As Microsoft navigates through these transitions, the company is evidently focusing on aligning its gaming division to meet future challenges and opportunities in the dynamic gaming market. The layoffs, though challenging, are a part of Microsoft's strategy to streamline operations and invest in areas critical for growth and market competitiveness.
