Microsoft cuts 1,900 jobs in gaming division after Activision Blizzard deal
Microsoft, the tech giant and owner of Xbox, announced on Thursday that it will lay off about 1,900 employees in its gaming division, or nearly 9% of its gaming workforce. The job cuts come three months after Microsoft completed its $69 billion acquisition of Activision Blizzard, the maker of popular games such as Call of Duty, World of Warcraft, and Candy Crush.
Why is Microsoft laying off gaming workers?
According to an internal memo obtained by CNBC1, Microsoft Gaming CEO Phil Spencer said that the layoffs were intended to minimize “areas of overlap” and align the strategy and execution plan of Microsoft Gaming and Activision Blizzard. He also said that the company will focus on the best opportunities for growth and innovation in the gaming industry.
Some of the affected employees worked on teams for Activision Blizzard, as well as Xbox and ZeniMax, another gaming company that Microsoft acquired last year for $7.5 billion. Among the high-profile departures are Mike Ybarra, the president of Blizzard and a former Xbox executive, and Allen Adham, the chief design officer of Blizzard and one of the founders of the company.
How will the layoffs affect Microsoft’s gaming business?
Microsoft’s gaming business is thriving and continues to be one of its most profitable segments, having generated $15.4 billion in revenue in the fiscal year 2023, which is a 34% increase from the previous year. Following the acquisition of Activision Blizzard, which is the largest deal in the history of the gaming industry, it is expected that Microsoft will see a boost in its gaming portfolio and subscriber base, as well as its cloud and AI capabilities.
The acquisition of Activision Blizzard by another company was not without challenges. The deal faced regulatory scrutiny and antitrust challenges. Furthermore, there was a significant backlash from gamers and activists due to allegations of sexual harassment and discrimination at Activision Blizzard. The U.S. Federal Trade Commission is still pursuing a case to undo the deal. The claim is that it would negatively impact competition and innovation in the gaming market.
The layoffs could be seen as a sign of Microsoft’s attempt to streamline its gaming operations and address the cultural and operational issues at Activision Blizzard. However, they could also raise questions about Microsoft’s commitment to the gaming industry and the future of its gaming franchises and platforms.
What are the implications and challenges of the gaming layoffs?
The gaming layoffs are part of a broader trend of job cuts in the tech sector as companies face the challenges of the post-pandemic economy, such as slowing growth, rising costs, and changing consumer behaviour. According to layoffs,. FYI, more than 260,000 tech workers lost their jobs in 2023, and the trend has continued in 2024, with companies such as Amazon, Google, eBay, and TikTok announcing layoffs in January.
The gaming industry, in particular, has been hit hard by the layoffs, as it faces increased competition, regulation, and social responsibility. Gaming companies such as Riot Games, Unity, Discord, and Twitch have also announced layoffs in January, affecting hundreds of employees.
The gaming layoffs could have significant impacts on the lives and careers of the affected workers, as well as the quality and diversity of the games and services they produce. They could also affect the gaming community and culture, as well as the innovation and creativity of the gaming industry
Leave a Reply