Microsoft Reduces Workforce in Major Gaming Division Shakeup

Microsoft (MSFT) has announced significant layoffs within its gaming division, impacting a crucial team.

In a memo obtained by IGN, Microsoft Gaming CEO Phil Spencer informed employees that 650 Xbox staff members will be laid off. "To align our post-acquisition team structure and manage our business effectively, we have decided to eliminate approximately 650 roles across Microsoft Gaming, primarily in corporate and support functions, to ensure long-term success," Spencer stated.

These layoffs follow Microsoft's acquisition of Activision Blizzard in October 2023, a deal first announced in 2022.

Spencer assured that no "games, devices, or experiences" would be canceled and that the studio would remain operational. However, other teams will be affected as they adjust to new priorities and manage game lifecycles and performance.

This round of layoffs comes after 1,900 Activision Blizzard and Xbox employees were let go in January.

Despite a 61% increase in Xbox content and services revenue in the fourth quarter of 2024, largely due to the Activision Blizzard acquisition, Microsoft reported a 42% decline in Xbox hardware revenue and expects continued year-over-year decreases.

Mass Layoffs in the Gaming Industry

The gaming industry has seen widespread layoffs over the past 18 months. According to Statista, approximately 11,250 gaming employees worldwide lost their jobs in 2023, with an additional 11,000 layoffs in the first half of 2024.

These job cuts have sparked criticism on social media, with many attributing them to "corporate greed." However, former Sony Computer Entertainment Europe President Chris Deering countered this view in a recent podcast interview, stating, "It's not fair to say the layoffs are due to greed."

Deering suggested that those laid off should find ways to move forward, emphasizing that having game development skills does not equate to a lifetime of poverty. "I presume people received decent severance packages, and by the time those run out... well, that's life," he added.