Microsoft cuts 650 jobs in Xbox division, without affecting games or studios

This is the third such layoff the company has made this year as it tries to rein in costs and integrate its massive $69 billion acquisition of Activision Blizzard Inc.

The positions being eliminated are “primarily corporate and support roles,” according to a memo sent to staff by Microsoft Gaming CEO Phil Spencer on Thursday. “No games, devices or experiences will be cancelled and no studios will be closed as part of these adjustments today.”

Microsoft had laid off 1,900 employees in early January.many of which were from the Activision division. In May, the company announced the closure of four studios acquired as part of its $7.5 billion purchase of ZeniMax, one of which was eventually sold.

These moves, coupled with the decision to release some Xbox games on rival consoles, have angered some of the platform’s fans and left them questioning Microsoft’s commitment to creating compelling exclusive content.

It’s been a tough year for the video game industry, which has struggled with rising development costs and slow growth. Major companies like Sony, Take-Two Interactive and Electronic Arts have cut jobs and cancelled high-profile projects. Earlier this month, Sony scrapped its big-budget multiplayer shooter Concord just two weeks after its release due to poor performance.

Meanwhile, Microsoft finalized its acquisition of Activision in October last year21 months after the deal was announced, following a lengthy antitrust battle, while the purchase boosts Xbox with new content and talent, Microsoft now faces the challenge of ensuring the investment pays off in the long run.

Here is the full memo that was sent to employees.

Changes in Microsoft Gaming

Over the past year, our focus has been on minimizing disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and the management of our business, we have made the decision to eliminate approximately 650 positions across Microsoft Gaming (mostly corporate and support roles) to organize our business for long-term success.

I know this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are finding out they have been impacted. In the US, we are supporting them with exit packages that include severance pay, extended medical care, and outplacement services to help them with their transition; outside the US, packages will vary by location.

With these changes, our corporate and support 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 changing priorities and manage the lifecycle and performance of games. No games, devices or experiences will be cancelled and no studios will be closed as part of these adjustments today.

Throughout our team’s history, we’ve had some great times and some tough times. Today is one of those tough days. I know going through more changes like this is difficult, but even in the toughest times, this team has been able to come together and show each other love and kindness as we work to continue to deliver for our players. We appreciate your support as we navigate these changes and thank you for your compassion and respect for each other.

Phil

(With contributions from Bloomberg)

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