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In a nutshell: Microsoft is chopping heads in its gaming division again. This morning, Phil Spencer notified corporate and support workers that Xbox no longer needed their services. The cuts are related to Microsoft's continuing effort to restructure after buying out Activision. So far, Redmond has laid off at least 11.5 percent of its gaming division this year.
The Verge obtained an internal memo penned by Xbox head Phil Spencer stating that the company is eliminating 650 positions. He noted that these cuts directly relate to Microsoft's post-acquisition restructuring. The layoffs are mostly "corporate and supporting functions."
Impacted employees will receive a severance package, extended healthcare benefits, and outplacement help. The eliminated positions are primarily in the US but include some overseas roles. The Xbox boss said employees outside the US may receive a different exit package but did not go into details.
– Wario64 (@Wario64) September 12, 2024Microsoft to cut 650 more gaming jobs - mostly corporate and supporting functions (reportedly at Activision Blizzard)
"No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today."https://t.co/NajrrdwVG5 pic.twitter.com/yAS9kdoW5a
The cuts will not affect any projects already in production or involve closing more studios.
"No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today," the memo reads.
The cuts are the latest casualties stemming from Microsoft's $69 billion merger with Activision Blizzard. The division cut about eight percent of its workforce in January, equating to 1,900 jobs. In May, the company shuttered four studios – Arkane Austin, Tango Gameworks, Alpha Dog Games, and Roundhouse Games. It is unclear how many employees were affected by those closures, as Xbox moved some of the workforce to other studios.
Xbox's troubles and restructuring are ripple effects of Microsoft's rapid expansion in its gaming division. The company has picked up 29 game studios within the last six years. It bought seven in 2018, including Ninja Theory and Obsidian Entertainment. It acquired Double Fine Productions in 2019 and Nemesys Games in 2023. The remaining 20 studios were included in its 2021 takeover of ZeniMax Media and last year's finalized pickup of Activision.
Those last two cost Microsoft over $76 billion. Analysts largely considered the purchases part of a gambit to improve Xbox hardware sales as it lagged behind Sony's PlayStation 5 since launch. The two mergers gave Microsoft control of big-name titles, including The Elder Scrolls, Fallout, Doom, Diablo, and Call of Duty. Unfortunately, the studio grabs didn't help Microsoft in the hardware department, as Xbox Series sales are still faltering.