Microsoft announces further layoffs in its gaming division

Xbox owner Microsoft is set to cut approximately 650 jobs from its gaming division in a new round of layoffs, following its $69 billion acquisition of Activision-Blizzard.

The company stated that the layoffs will primarily impact employees in “mostly corporate and supporting functions” around the globe. This follows a previous round of 1,900 layoffs in January and the closure of four studios acquired before the Activision-Blizzard deal was finalized.

In a memo shared online and verified by the BBC, Xbox head Phil Spencer assured that “no games, devices, or experiences are being cancelled, and no studios are being closed” as a result of these layoffs.

The recent cuts, affecting about 3% of Microsoft’s gaming staff, are part of a broader effort to “align our post-acquisition team structure” and set up the business for long-term success, Spencer explained. Although games and studios will remain unaffected, there will be “some impacts to other teams” as they adapt to shifting priorities and manage game lifecycles.

Spencer acknowledged that the news would be challenging for employees and expressed gratitude to those affected. The gaming industry has experienced significant layoffs over the past two years, following a surge in investments and acquisitions driven by record profits and player numbers during the COVID-19 pandemic. Companies like Sony, Riot Games, and Epic have also conducted substantial layoffs.

Microsoft has faced criticism for closing notable studios such as Arkane Austin and Tango Gameworks earlier this year. In response to recent challenges, Spencer had previously stated a commitment to running a “sustainable” gaming business and achieving growth.

Despite a rise in gaming revenues, largely due to the acquisition of Activision-Blizzard—which owns popular titles like World of Warcraft, Diablo, and Overwatch—Microsoft has seen a decline in Xbox hardware sales. The company is focusing on expanding its software sales and showcased several upcoming games, including Call of Duty: Black Ops 6, during a June event.

However, Microsoft has faced backlash from fans over price increases for its Game Pass service and the decision to release some games on rival consoles. Notably, “Indiana Jones and the Great Circle,” one of this year’s major Xbox releases, will eventually be available on PlayStation 5, albeit months after its Xbox debut. Additionally, four previously exclusive games will now also be released on PS5 and Nintendo Switch.

Microsoft has been contacted for comment on this latest announcement.