Microsoft Announces Layoffs of 1,900 Employees in Gaming Division

Microsoft, the leading technology company, recently announced that it will be laying off approximately 1,900 employees from its gaming division. This represents around 9% of the 22,000 Microsoft Gaming employees. The layoffs come just three months after Microsoft closed on its $69 billion acquisition of Activision Blizzard.

Microsoft’s Gaming CEO, Phil Spencer, stated in a memo obtained by CNBC that the layoffs were part of a larger “execution plan” to reduce “areas of overlap” within the company. The memo also stated that Microsoft would provide “full support” to all employees, including severance benefits based on local employment laws.

Former Blizzard President, Mike Ybarra, announced on social media platform X that he would be leaving Microsoft and Blizzard. Blizzard co-founder and design leader, Allen Adham, is also departing, and Blizzard will stop developing a new survival game.

Microsoft shares were largely flat on the news, as layoffs are often expected after large mergers close. Microsoft’s acquisition of Activision Blizzard was the company’s largest ever deal, more than double the size of its 2016 purchase of LinkedIn.

Tech companies have been making deep cuts in 2024, with many layoffs unrelated to mergers and acquisitions. Companies such as Tencent-owned Riot Games, TikTok, and Discord have all announced layoffs, following a dismal 2023 which saw over 100,000 tech workers laid off.

Earlier this week, eBay announced it would lay off 1,000 workers, while SAP announced it would shift or buy out 8,000 employees. Unlike the Microsoft layoffs, eBay and SAP saw a significant bump in their share prices after their announcements.

Microsoft’s layoffs are a difficult moment for the team, but the company remains committed to investing in areas that will grow the business and support its strategy of bringing more games to more players around the world. The leadership team is committed to navigating the process as thoughtfully as possible and providing full support to those impacted during the transition.

Microsoft’s gaming division is responsible for publishing and developing several massive gaming franchises, including Call of Duty and Diablo. Its mobile gaming subsidiary, King, is the developer behind Candy Crush Saga. The impact of the layoffs on these franchises and subsidiaries remains to be seen.

The tech industry has been under pressure to demonstrate higher efficiency and a clearer road to growth or profitability as economic pressures mount. Microsoft’s acquisition of Activision Blizzard was seen as a way to address these pressures and expand the company’s offerings in the gaming industry. However, the layoffs may raise questions about the company’s ability to effectively integrate the new acquisition and achieve the expected synergies.

Microsoft’s layoffs are a reminder that even in the tech industry, which is often seen as a growth sector, companies must make difficult decisions to adapt to changing market conditions and maximize shareholder value. The impact of the layoffs on the affected employees and the broader tech industry remains to be seen.

In conclusion, Microsoft’s announcement of layoffs in its gaming division represents a significant shift for the company, which has been under pressure to demonstrate higher efficiency and a clearer road to growth or profitability. The impact of the layoffs on the affected employees and the broader tech industry remains to be seen, but the company remains committed to investing in areas that will grow the business and support its strategy of bringing more games to more players around the world.

Microsoft’s acquisition of Activision Blizzard was seen as a way to address these pressures and expand the company’s offerings in the gaming industry, but the layoffs may raise questions about the company’s ability to effectively integrate the new acquisition and achieve the expected synergies. The tech industry continues to face economic pressures, and companies must make difficult decisions to adapt and maximize shareholder value. The impact of these decisions on employees and the broader industry is a complex issue that requires careful consideration and thoughtful execution.