Microsoft Restructures Gaming Division, Leading to 1,900 Job Cuts

The News:

• Microsoft lays off 1,900 employees in its gaming division.
• Decision follows Activision Blizzard acquisition and aims to optimize costs.
• Cuts to affect mainly Activision Blizzard, with smaller impacts on Xbox and ZeniMax.
• Blizzard President Mike Ybarra steps down.
• Microsoft pledges support to departing employees.
• Layoffs raise concerns about industry trends and project development.

Microsoft announced Thursday that it will be reducing its gaming workforce by approximately 1,900 roles. This represents roughly 8% of the combined Xbox and Activision Blizzard teams, totaling 22,000 employees.

The decision comes three months after Microsoft completed its historic $69 billion acquisition of Activision Blizzard, bringing major franchises like Call of Duty and World of Warcraft under its umbrella.

In an internal memo obtained by The Verge, Microsoft Gaming CEO Phil Spencer explained that the layoffs are part of "aligning on a unified strategy" and achieving "a sustainable cost structure that will support the whole of our growing business."

While the memo did not specify which departments or positions would be affected, it's expected that the majority of cuts will occur within Activision Blizzard, with smaller impacts on Xbox and ZeniMax Media (another Microsoft-owned gaming company).

Additionally, Blizzard President Mike Ybarra announced his departure from the company, effective immediately.

Commitment

"These are difficult decisions, and we recognize the impact they have on our talented colleagues," Spencer wrote in the memo. "We are committed to supporting those who are departing with severance packages and outplacement services."

"Microsoft's announcement that it will be laying off 1,900 video game workers makes clear that, even when you work at a successful company in an extremely profitable industry, your livelihood is not protected without a voice on the job," Communications Workers of America (CWA) said.

"We will continue to support workers at Microsoft and across the video game industry who want to have a union voice on the job," it added.

Several Layoffs in Tech Industry

Many big tech companies have laid-off thousands of hundreds of employees in the previous weeks. Examples are Google - with more layoffs coming, TikTok, Amazon and eBay. Mostly, these laid off were made to lower cost and boost profitability.

Furthermore, in January 2024 alone, more than 21, 000 jobs have been cutoff in 76 tech companies around the world. In addition, more than 168,032 jobs in 2023 were cutoff in the tech industry, including the 10,000 job cut in Microsoft alone.

The news of the layoffs is likely to stir concerns within the gaming industry, which has already witnessed significant job cuts at companies like Electronic Arts and Take-Two Interactive in recent months.

While Microsoft asserts that the restructuring will ultimately strengthen its position in the competitive gaming landscape, the short-term impact on employees and the development of ongoing projects remains uncertain.