Microsoft Announces Major Layoffs in Gaming Division: 1,900 Workers Affected

Microsoft, the leading technology company, has recently announced a major round of layoffs in its gaming division, affecting approximately 1,900 employees from its Xbox, Activision Blizzard, and ZeniMax (aka Bethesda) teams. This news comes just one month into the new year, making it another brutal year for workers in the video game industry. With these layoffs, the total number of video game layoffs in 2024 has reached around 6,000.

In 2023, there were around 9,000 layoffs in the industry, according to some estimates. This trend has continued into the new year, with Microsoft being the latest company to announce significant cuts. The majority of the cuts are said to be within Activision Blizzard, three months after Microsoft finally closed its $68.7 billion takeover of the publisher. Some positions on the Xbox and ZeniMax teams will also be affected. These cuts equate to around eight percent of Microsoft’s gaming division.

Microsoft Gaming CEO Phil Spencer sent a memo to employees, obtained by The Verge, explaining the decision. He stated that the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of their growing business. Spencer wrote, “As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1,900 roles out of the 22,000 people on our team.”

Spencer expressed gratitude to the employees who are directly impacted by these reductions, acknowledging their contributions to the success of Activision Blizzard, ZeniMax, and the Xbox teams. He assured that Microsoft will provide full support to those who are impacted during the transition, including severance benefits informed by local employment laws.

Among those leaving the company is Blizzard president Mike Ybarra, who is exiting of his own accord. In a statement on X, Ybarra thanked everyone who is impacted by these reductions for their meaningful contributions to their teams, to Blizzard, and to players’ lives. He expressed his gratitude to the Blizzard community and announced that this is his last day at Blizzard. Microsoft’s game content and studios president Matt Booty plans to appoint a new Blizzard president next week.

One other major consequence of this reorganization is the cancellation of Blizzard’s untitled survival game. This would have marked Blizzard’s entry into a new genre, but it did not reveal any other details about the project since announcing it two years ago. Some of the developers who were working on the survival game are being moved over to “one of several promising new projects Blizzard has in the early stages of development,” Booty wrote.

Layoffs are commonplace following major mergers, especially once higher-ups pinpoint areas of overlap. Oftentimes, that’s seen in positions on the corporate side, such as marketing and human resources. However, this is the largest single slate of layoffs in the gaming industry so far this year, outstripping the 1,800 workers that Unity is letting go. Twitch and Discord are also laying off hundreds of people each. This week, Riot Games said it was reducing its headcount by around 530 people. Dead by Daylight studio Behaviour Interactive, Tiny Tina’s Wonderland developer Lost Boys Interactive, and Outriders maker People Can Fly are also among the many gaming companies to have conducted layoffs so far in 2024.

The video game industry has been facing challenges in recent years, with the COVID-19 pandemic leading to a surge in demand for games and consoles. However, the industry is now experiencing a downturn, with sales declining and companies facing economic pressures. The layoffs are a reflection of these challenges, as companies seek to reduce costs and streamline their operations.

Despite the challenges, the video game industry remains a significant contributor to the global economy, with revenues projected to reach $180 billion in 2024. The industry continues to innovate and push the boundaries of technology, with new games and consoles offering immersive experiences and advanced graphics. The layoffs are a temporary setback, and the industry is expected to recover in the coming years.

In conclusion, Microsoft’s announcement of major layoffs in its gaming division is a significant development in the video game industry. With around 1,900 employees affected, this is the largest single slate of layoffs in the gaming industry so far this year. The layoffs are a reflection of the challenges facing the industry, with sales declining and companies facing economic pressures. However, the industry remains a significant contributor to the global economy and is expected to recover in the coming years. The affected employees are being offered support during the transition, and Microsoft remains committed to investing in areas that will grow its business and support its strategy of bringing more games to more players around the world.