Microsoft to Eliminate 650 Jobs in Gaming Division Amid Ongoing Restructuring

Microsoft will cut approximately 650 positions from its gaming division as part of its continued restructuring efforts. This move follows a $69 billion acquisition of Activision Blizzard and comes on the heels of earlier layoffs that affected 1,900 employees in January and the closure of four studios in May.

In an internal memo shared online and confirmed by the BBC, Xbox head Phil Spencer assured employees that these layoffs will not impact game development, device production, or the closure of any studios. Instead, the reductions are part of a strategy to better align the team structure following the acquisition and to ensure the company’s long-term success.

The job cuts represent about 3% of Microsoft’s gaming workforce. While Spencer indicated that the restructuring will not directly affect game development or studio operations, there may be some indirect impacts on other teams as they adjust to new priorities.

This announcement comes amidst a broader trend of layoffs in the gaming industry, with companies like Sony, Riot Games, and Epic Games also making cuts in response to shifting market dynamics post-pandemic.

Despite criticism over previous studio closures, including Arkane Austin and Tango Gameworks, Microsoft reported increased gaming revenues in its latest financial update, largely driven by its acquisition of Activision Blizzard and its popular titles like World of Warcraft, Diablo, and Overwatch. However, declining Xbox hardware sales have led the company to focus more on expanding software sales.

At recent gaming events, Microsoft showcased new releases such as Call of Duty: Black Ops 6, which received positive feedback. Nonetheless, the company has faced criticism for increasing Game Pass prices and releasing certain games on rival consoles. Notably, Indiana Jones and the Great Circle will launch on PlayStation 5 several months after its Xbox debut.

Microsoft has been contacted for additional comments regarding this latest round of layoffs.