IT layoffs: Microsoft has fired over 2,500 employees from gaming division since Activision Blizzard acquisition

Microsoft has announced it is cutting 650 more jobs from its gaming division. These layoffs mainly affect corporate and support roles, according to a memo from Xbox chief Phil Spencer cited by IGN. This move is part of Microsoft’s efforts to restructure its gaming business after acquiring Activision Blizzard last year.

Phil Spencer assured employees that no games, devices, or studios are being cancelled or closed as a result of these layoffs. Instead, the focus is on organising the business to ensure long-term success. Spencer said these changes will help the company support its game studios and business units more efficiently.

Since Microsoft bought Activision Blizzard for $69 billion in 2023, it has been making adjustments to how its gaming teams work. These latest job cuts follow an earlier round of layoffs this year, where 1,900 employees were let go. In total, 2,550 jobs have been cut from Microsoft’s gaming business since the acquisition.

Although Microsoft’s gaming revenue has increased—thanks to Activision Blizzard—other parts of its Xbox business are struggling. Xbox hardware sales have dropped, and Microsoft has even released some of its exclusive games on rival platforms like PlayStation to bring in more money.

Despite these challenges, the gaming division’s overall revenue has grown, mainly due to Activision Blizzard’s contribution. The company is also preparing to release several new games and products, including Call of Duty: Black Ops 6 and new Xbox consoles.

Microsoft’s gaming business is still evolving. The company is focused on making its games available across consoles, PCs, and cloud platforms. While the layoffs are difficult, Spencer says the changes are necessary to ensure the company’s future growth and success.

Here's the full memo sent by Phil Spencer (via IGN): 

For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming — mostly corporate and supporting functions — to organize our business for long term success.
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. In the U.S., we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the U.S. packages will differ according to location.

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 with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today.

Throughout our team’s history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.

Phil