Tech giant Microsoft is undergoing a significant workforce reduction in its video games division, with approximately 1,900 employees being laid off. According to sources familiar with the matter, the announcement was made through a memo from Xbox boss Phil Spencer.
In the memo, Spencer outlined the company’s commitment to establishing a strategic and executable plan for Microsoft Gaming and Activision Blizzard in 2024. The objective is to create a sustainable cost structure that can effectively support the growth of the entire business. Together, the leadership teams have identified priorities, areas of overlap, and growth opportunities.
As a result of this strategic realignment, Microsoft has reluctantly decided to cut around 1,900 positions, accounting for a portion of the 22,000-strong workforce in the gaming division. Spencer expressed gratitude to the affected individuals, acknowledging their significant contributions to the success of Activision Blizzard, ZeniMax, and the Xbox teams.
In addition to the workforce reduction, Blizzard’s previously announced survival title has been canceled. Matt Booty, President of Game Content Studios, communicated this decision to staff in an internal message. He mentioned that some of the team members working on the canceled project would be reassigned to other promising projects at Blizzard that are in the early stages of development.
The restructuring also saw the departure of key figures within Blizzard. Allen Adham, Chief Design Officer, and Mike Ybarra, President of Blizzard Entertainment, have both left the company. Ybarra, who officially announced his exit on social media, expressed gratitude to the impacted individuals and emphasized that the decision is not a reflection of their outstanding work.
This round of layoffs follows a similar event a year earlier, where Microsoft laid off 10,000 employees, including staff from Bethesda Game Studios and 343 Industries. The recent workforce reduction comes three months after the completion of Activision Blizzard’s acquisition by Microsoft, a deal worth $68.7 billion. Regulatory hurdles in the UK, EU, and US had initially delayed the acquisition.
Microsoft is scheduled to report its second-quarter earnings next week. In the first quarter, the company reported a net income of $22.3 billion, reflecting a 27% year-over-year increase.