Redmond giant Microsoft stunned the gaming world this week with plans to axe 1,900 jobs across its gaming division. The surprising cuts land amid record revenue for the tech titan – and an industry awash in layoffs.
Just days after rival gaming firm Riot Games shed 11% of its workforce, Microsoft Gaming CEO Phil Spencer delivered a bracing email to employees. Despite Microsoft’s soaring $57 billion Q1 2024 earnings, Spencer cited the need “to set a sustainable cost structure” before handing 1,900 pink slips.
The victims? Mainly employees from newly-acquired Activision Blizzard, including Blizzard Entertainment president Mike Ybarra and studios working on now-cancelled titles like Project Odyssey.
It’s a brutal about-face for a company that recently empowered unionization at its ZeniMax subsidiary. And it has loyal Xbox fans seeing red.
“Gross doesn’t cover it,” said longtime gaming analyst Pete Dodd. “1900 jobs, just as Microsoft hits peak profits? It’s counter-productive and insulting.”
With Spencer vowing “difficult changes” ahead, insiders whisper of more turmoil. Morale has plummeted across Microsoft Gaming, with remaining employees anxiously awaiting the next shoe to drop.
For a division that escaped last year’s massive layoffs at Microsoft unscathed, gaming has become an unexpected bloodbath. And with little transparency from Spencer and his embattled leadership team, clouds loom over the gaming jewel in Microsoft’s crown.
Here’s his full email to the Xbox employees:
It’s been a little over three months since the Activision, Blizzard, and King teams joined Microsoft. As we move forward in 2024, 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 our growing business. Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth.
As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1900 roles out of the 22,000 people on our team. The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible. The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax and the Xbox teams, and they should be proud of everything they’ve accomplished here. We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues. We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws. Those whose roles will be impacted will be notified, and we ask that you please treat your departing colleagues with the respect and compassion that is consistent with our values.
Looking ahead, we’ll continue to invest in areas that will grow our business and support our strategy of bringing more games to more players around the world. Although this is a difficult moment for our team, I’m as confident as ever in your ability to create and nurture the games, stories and worlds that bring players together.