In a major move that reflects the ongoing restructuring within its gaming division, Microsoft has announced plans to lay off approximately 650 employees at Xbox. This decision comes as part of the company’s efforts to align its team structure following the acquisition of Activision Blizzard.
Phil Spencer, CEO of Microsoft Gaming, communicated the news to employees in a memo, with a message that the layoffs are necessary to support the company’s long-term success. While the decision was described as “difficult,” Spencer assured employees that no games, devices, or gaming experiences would be cancelled as a result.
The majority of the layoffs are expected to occur in corporate and supporting functions within the Xbox division, rather than directly in game development roles. Microsoft is offering exit packages to affected employees, including severance pay, extended healthcare benefits, and outplacement services.
This announcement marks the third major reduction in workforce at Microsoft’s gaming division since the acquisition of Activision Blizzard. Earlier this year, the company laid off 1,900 employees and closed several gaming studios.
The layoffs at Xbox are part of a broader trend in the gaming industry, with other major companies like Sony, Unity, Twitch, Playtika, and Discord also announcing job cuts recently. Microsoft’s decision to slash its workforce reflects the need to optimise operations and ensure the sustainability of its investment in gaming.
The acquisition of Activision Blizzard has been a major undertaking for Microsoft, and the company is now focusing on integrating the two companies’ operations. The layoffs are seen as a necessary step to streamline the organization and ensure a smooth transition.
While the layoffs are a significant blow to the affected employees, Microsoft has emphasized its commitment to supporting them during this difficult time. The company is providing outplacement services to help employees find new jobs and is also offering extended healthcare benefits. Read below the full memo.
Subject: Changes to Microsoft Gaming
For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming-mostly corporate and supporting functions-to organize our business for long term success.
I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US packages will differ according to location.
With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today.
Throughout our team’s history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.
Phil
