Microsoft was said to cut approximately 1,900 jobs in its gaming unit, comprising about 9% of its workforce, in a memo obtained by CNBC on Thursday.
In an authentic letter confirmed by Microsoft, CEO Phil Spencer expresses that letting go of staff was a "painful decision," and is part of a broader "execution plan" three months after the teams from Activision, Blizzard, and King joined Microsoft. As they progress into 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to devising a strategy and a sustainable cost structure plan to set priorities, identify areas of overlap, and ensure alignment on the best growth opportunities.
Layoffs Being Part of a Broader Execution Plan
As part of the process, a reduction in the gaming workforce, including Activision Blizzard, ZeniMax, and the Xbox teams, will result in about 1,900 roles being cut out of the 22,000 people. According to CEO Spencer, full support, including severance benefits as per local employment laws, will be provided during the transition.
Microsoft will continue to invest in areas that support a strategy of reaching more players worldwide, and they have confidence in the team's ability to create and nurture games, stories, and worlds that bring players together.
On Thursday, former Blizzard President Mike Ybarra announced on the social media platform X (formerly Twitter) that "it had been an honor" to lead the company through an incredible time and would remain its "biggest fan from the outside. Co-founder Allen Adham, who serves as the unit's design chief, is also leaving.
In a second letter, Microsoft Studios head Matt Booty mentioned that meetings with affected staff would occur throughout the day, and employees outside North America would receive information later. Additionally, Booty said Blizzard will no longer be working on a new survival game, which a Microsoft spokesperson confirmed as authentic in The Verge's published post.
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Activision Blizzard Acquisition
Activision Blizzard is known for major gaming franchises like Call of Duty and Diablo. Meanwhile, King, their mobile gaming subsidiary, is the creator of the Candy Crush Saga.
Microsoft's shares remained relatively unchanged after the news, as layoffs are commonly anticipated following significant mergers. Microsoft's Activision Blizzard's acquisition for $69 billion was its largest-ever deal, surpassing the size of its LinkedIn purchase in 2016.
Other Tech Investors' Layoffs
Tech investors now anticipate greater efficiency and a more defined path to growth or profitability due to increasing economic pressures. Many tech companies, including Riot Games (owned by Tencent), TikTok, and Discord, implemented substantial layoffs where 100,000 tech workers were laid off in the early weeks of 2024.
Earlier this week, eBay announced it would lay off 1,000 employees, and SAP revealed plans to either shift or buy out 8,000 of its workers. Unlike Microsoft, eBay and SAP experienced a notable increase in their share prices following their announcements of layoffs.
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