Microsoft (MSFT) has made a major change to its workforce, which involves significantly shrinking a vital team through layoffs.
In a new memo sent to employees, which was obtained by IGN, Microsoft Gaming CEO Phil Spencer informed staff that the company will be laying off 650 Xbox employees.
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“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,” said Spencer in the memo.
The job cuts come after Microsoft completed its acquisition of video game company Activision Blizzard in October 2023 after first announcing it in 2022.
Spencer also clarified in the memo that the layoffs would not cancel any “games, devices or experiences” and that the studio would remain open. However, the change will impact other teams.
“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,” said Spencer.
Phil Spencer, executive vice president of Xbox Business for Microsoft Corp., speaks during the company’s Xbox One X reveal event ahead of the E3 Electronic Entertainment Expo in Los Angeles, California, U.S., on Sunday, June 11, 2017.
This current round of layoffs in Microsoft’s gaming division follows the January layoffs of 1,900 Activision Blizzard and Xbox employees.
The change also comes after Microsoft revealed in its fourth-quarter earnings report for 2024 that its Xbox content and services revenue increased 61% compared to the same time period last year, mainly due to the Activision Blizzard acquisition.
However, during an earnings call on July 30, which discussed the earnings report, Microsoft revealed that its Xbox hardware revenue decreased by about 42% during the quarter and that it expects continued year-over-year declines.
Gaming industry employees face mass layoffs
Over the past year and a half, mass layoffs have hit the gaming industry. According to recent data from Statista, roughly 11,250 gaming employees worldwide lost their jobs via layoffs in 2023.
The trend won’t end anytime soon, as during the first six months of 2024, 11,000 gaming employees lost their jobs.
These layoffs have been widely criticized on social media, where many people have blamed the job cuts on “corporate greed.”
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Former Sony Computer Entertainment Europe President Chris Deering recently shot down that criticism during a recent “My Perfect Console with Simon Parkin” podcast interview.
“I don’t think it’s fair to say that the resulting layoffs have been greed,” said Deering
He also claimed that those who were laid off in the gaming industry should “figure out how to get through it” and that having a skill in game development does not mean a lifetime of “poverty or limitation.”
“I presume people were paid some kind of decent severance package, and by the time that runs out … Well, you know, that’s life,” said Deering.
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