Microsoft, the owner of Xbox, will lay off approximately 650 employees from its gaming division in a new wave of job cuts following its $69 billion (£54.3 billion) merger deal.
The company stated that the layoffs will impact staff primarily involved in “corporate and supporting functions” globally.
Earlier this year, Microsoft laid off 1,900 employees in January and shut down four studios acquired before its acquisition of Activision-Blizzard, the maker of Call of Duty.
In a memo to employees, which was shared online, Xbox head Phil Spencer assured that “no games, devices, or experiences are being canceled and no studios are being closed” as a result of these layoffs.
Microsoft’s acquisition of Activision-Blizzard in October also included King, the maker of Candy Crush, and followed the company’s purchase of Zenimax, which owns Fallout developer Bethesda.
Spencer explained that Microsoft had aimed to “minimize disruption” while integrating new teams after the multibillion-dollar acquisition. He stated that the decision to reduce the workforce—about 3% of its gaming staff—was made “as part of aligning our post-acquisition team structure” to ensure the business’s “long-term success.”
Although Spencer affirmed that games and studios would not be affected, he mentioned there would be “some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games.”
He acknowledged the difficulty of the situation for affected employees and expressed gratitude for their contributions.
The gaming industry has experienced significant layoffs over the past two years following a surge in investments and acquisitions during the Covid-19 pandemic, which saw record profits and player numbers.
Companies such as PlayStation maker Sony, League of Legends creator Riot Games, and Fortnite owner Epic Games have also laid off hundreds of workers.
Microsoft faced particular criticism for closing the acclaimed studios Arkane Austin and Tango Gameworks earlier this year.
Spencer told gaming website IGN in June that he was expected to run a “sustainable” gaming business and demonstrate growth. In an official Xbox stream at Gamescom last month, he emphasized that there was “a high bar” for the company’s gaming division.
Microsoft’s latest financial report indicated an increase in gaming revenues, largely due to its ownership of Activision-Blizzard, which also produces World of Warcraft, Diablo, and Overwatch.
However, sales of Xbox hardware have declined since last year, prompting the company to focus on expanding its software sales.
Xbox recently showcased a series of upcoming games, including Call of Duty: Black Ops 6, which was well-received. However, the company has faced backlash for increasing the price of its Netflix-style Game Pass service and for plans to release certain games on competing consoles.
One of the major Xbox releases this year, Indiana Jones and the Great Circle, will also be available on PlayStation 5, though it will launch on Sony’s console several months after its Xbox debut.
This follows earlier announcements that four previously exclusive games will be coming to PS5 and Nintendo Switch.
