Microsoft has recently implemented a significant layoff, affecting approximately 1,900 employees within its gaming division. This decision comes in the wake of Microsoft’s acquisition of Activision Blizzard, a major move that positioned the company as the world’s third-largest gaming entity by revenue. The layoffs represent about 8-9% of the staff in the gaming division, which includes Xbox, Activision Blizzard, and ZeniMax teams.
Phil Spencer, the head of Microsoft’s gaming division, outlined in a memo to employees that these layoffs were a part of the company’s strategy to establish a sustainable cost structure and integrate the operations of Microsoft Gaming and Activision Blizzard more effectively. He emphasized the importance of aligning on strategies and execution plans that support the growth of their gaming business, which employs around 22,000 people.
The announcement of these layoffs is not isolated to Microsoft but reflects a broader trend of staff reductions across the tech industry, including other major companies like Amazon and eBay. Such moves have been more prevalent since late 2022 and have continued into early 2024. These layoffs at Microsoft and elsewhere in the tech sector are part of an ongoing adjustment to the companies’ workforce and structural needs in a rapidly changing industry landscape.
As part of the significant layoffs at Microsoft’s gaming division following the acquisition of Activision Blizzard, Blizzard Entertainment President Mike Ybarra has also announced his departure from the company. Ybarra, a former executive at Xbox, had joined Blizzard in 2019. In a statement posted on Twitter / X, Ybarra expressed his gratitude and support for those affected by the layoffs, emphasizing that the decision was not a reflection of their work quality.
I want to thank everyone who is impacted today for their meaningful contributions to their teams, to Blizzard, and to players’ lives. It’s an incredibly hard day and my energy and support will be focused on all those amazing individuals impacted – this is in no way a reflection…
— Mike Ybarra 🎄 (@Qwik) January 25, 2024
He also communicated his decision to leave Blizzard, citing his long tenure at Microsoft and the completion of the Activision Blizzard acquisition as factors in his decision. Ybarra’s message highlighted his commitment to supporting those impacted and his ongoing passion for Blizzard’s community and teams.
Additionally, Blizzard’s Chief Design Officer and co-founder Allen Adham is also leaving the company. This departure comes alongside the cancellation of a long-in-development survival game, known as “Odyssey.” Despite the project’s significant growth in the previous year, with a doubling of the team and plans for further expansion, the game has been halted.
Furthermore, sources revealed to IGN, that Microsoft’s gaming teams had already experienced significant cuts to marketing budgets before the announcement of the staff layoffs. These cuts have occurred despite a recent showcase by Xbox, previewing several upcoming exclusive games, indicating a complex and changing landscape within the company and the gaming industry at large.
The layoffs at Microsoft are part of a broader trend within the video game industry. Many high-profile studios have been reducing staff or closing down entirely. This trend contrasts sharply with the previous year’s success in blockbuster video game releases. Estimates suggest that the number of workers laid off in the gaming industry last year was close to or exceeded 10,000, and the situation in 2024 seems to be continuing in a similar vein. A recent survey conducted by the Game Developers Conference (GDC) suggests that one-third of all game developers were affected by layoffs last year, either directly or indirectly.
These changes in the gaming industry, particularly at Microsoft and Blizzard, highlight the volatility and rapid evolution of this sector, as companies adjust to new market dynamics and strategic priorities.