Microsoft lay offs 1,900 employees in its Gaming unit

Microsoft’s Gaming division is set to lay off around 1,900 employees, which constitutes about 9% of the unit’s staff, according to an internal memo.

Phil Spencer, Microsoft Gaming’s CEO, explained in the memo that these layoffs are part of a wider “execution plan” aimed at cutting down “areas of overlap.” This move comes three months after Microsoft finalized its acquisition of Activision Blizzard.

Additionally, Mike Ybarra, Blizzard’s former president, announced his departure from Microsoft and Blizzard. Allen Adham, Blizzard’s co-founder and design chief, will also leave the company, and development of a new survival game by Blizzard will be discontinued.

Despite these developments, Microsoft’s share price remained relatively stable. This is likely due to the common expectation of layoffs following large mergers. Microsoft’s acquisition of Activision Blizzard, valued at $69 billion, was the biggest in the company’s history.

In the broader tech industry, firm cuts have occurred early in 2024, not solely related to mergers and acquisitions. These layoffs, ranging from Tencent’s Riot Games to TikTok and Discord, succeed a challenging 2023 that saw over 100,000 tech workers lose their positions.

Earlier this week, eBay and SAP also announced job cuts. However, unlike Microsoft, these companies experienced a significant uplift in their share price after the announcement.

Read Spencer’s memo below:

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.

Phil