Aayush Pathak
Microsoft Corp. has announced it will lay off approximately 650 employees from its Xbox division, marking the third round of job cuts this year. This decision comes as the tech giant seeks to rein in costs and effectively integrate its recent $69 billion acquisition of Activision Blizzard Inc. The layoffs primarily affect corporate and supporting functions, according to a memo sent to staff by Xbox chief Phil Spencer.
Details of the Layoffs
In his memo, Spencer reassured employees that “no games, devices, or experiences are being cancelled, and no studios are being closed as part of these adjustments today.” This statement aims to alleviate concerns among fans and employees regarding the future of Xbox’s game development and support.
The layoffs follow a significant reduction earlier this year when Microsoft cut 1,900 jobs, many of which were from Activision units and studios. In May, the company also announced the closure of four studios acquired during its $7.5 billion purchase of ZeniMax, further indicating a trend of consolidation within the gaming division.
Industry Context and Challenges
The gaming industry as a whole has faced a tumultuous year, grappling with rising development costs and stagnant growth. Major companies, including Sony Group Corp., Take-Two Interactive Software Inc., and Electronic Arts Inc., have also implemented job cuts and shelved high-profile projects. For instance, Sony recently cancelled its big-budget multiplayer shooter Concord just weeks after its release, reflecting a lack of patience for underperforming titles.
Microsoft’s acquisition of Activision Blizzard, completed in October after a lengthy antitrust review, was intended to bolster Xbox’s content offerings and talent pool. However, the integration process has presented challenges, prompting the need for restructuring and cost management.
Statements from Microsoft Leadership
In the memo, Spencer acknowledged the difficult nature of the layoffs, expressing gratitude for the contributions of affected employees. He stated, “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.”
To support those affected, Microsoft is providing exit packages that include severance, extended healthcare, and outplacement services in the U.S., with varying packages available in other regions.
Spencer emphasized the importance of aligning corporate and support teams for sustainable growth, stating, “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.”
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