Microsoft is planning to lay off another 650 employees from its gaming division, according to a memo sent to employees by Xbox CEO Phil Spencer today, September 12, obtained by IGN.
In the memo, Spencer said the roles are primarily corporate and support functions and were created “to structure our business for long-term success.” He clarified that no games, devices, or experiences would be canceled and no studios would be closed as part of the cuts.
The latest layoffs mean Microsoft has shed 2,550 jobs from its gaming division since acquiring Activision Blizzard for $69 billion in 2023.
Below is the full text of Phil Spencer’s email to staff:
Over the past year, our goal has been to minimize disruption while welcoming novel teams and enabling them to do their best work. As part of realigning our team structure following the acquisition and managing our business, we have made the decision to eliminate approximately 650 roles within Microsoft Gaming—primarily corporate and support roles—to position our business for long-term success.
I know this is complex news. We are deeply grateful for the input of our colleagues who are learning they have been impacted. In the U.S., we are supporting them with exit packages that include severance, extended health care, and outplacement services to support them transition; outside the U.S., packages will vary by location.
These changes position our corporate and support teams and resources for sustainable growth into the future 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 are being canceled, and no studios are being closed as part of today’s changes.
Throughout our team’s history, we have had great moments and complex moments. Today is one of those complex days. I know it is complex to go through changes like this, but even in the most complex times, this team has been able to come together and show each other care 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
These cuts follow a shocking 1,900 layoffs that Microsoft made across its games division earlier this year, and continue the recent tough times for the video game industry. Microsoft shuttered Hi-Fi Rush developer Tango Gameworks and Redfall developer Arkane Austin as part of the cuts. Speaking to IGN in June, Spencer said, “I have to run a sustainable business within the company and grow, and that means sometimes I have to make tough decisions that, quite frankly, aren’t decisions that I love, but decisions that someone has to make.”
While Spencer insisted that Microsoft’s video game franchise is “getting stronger” and that Xbox gamers are “at their peak this year,” the gaming industry is now moving a number of its games to rival platforms, including the PlayStation 5.
Xbox hardware sales fell again in Microsoft’s fiscal fourth quarter, the last fiscal quarter for which we have data, while gaming content sales surged again thanks to the company’s acquisition of Activision Blizzard. Gaming revenue overall appears to be more than hearty year-over-year, even breaking quarterly records, but that was largely due to growth provided by Activision Blizzard (it wasn’t there to make money for the company last year, but it is now, so the numbers are up). Gaming revenue was up 44% year-over-year, but with a 48% net gain from the acquisition, indicating that the non-Activision Blizzard Xbox business isn’t doing as well as it did last year. Xbox content and services revenue fared better, up 61% year-over-year, with a 58% net gain from the acquisition.
Overall, Microsoft’s More Personal Computing division (which includes Xbox, as well as other segments like Windows) brought in revenue of $15.9 billion in the fourth quarter, up 14% year-over-year.
In August, Spencer said Xbox’s expansion across multiple platforms was partly intended to attract more money to Microsoft’s gaming division — pressure to deliver on the plans has intensified following Microsoft’s $69 billion acquisition of Call of Duty maker Activision Blizzard last year.
“And we run a company,” Spencer said. “It’s definitely true that at Microsoft, the bar is set high for us in terms of delivering what we have to give back to the company. Because we get a level of support from the company that’s just incredible and what we’re able to do.
“So I’m looking at how can we make our games as strong as possible? Our platform continues to evolve, on console, on PC, and in the cloud. That’s just going to be the strategy that works.”
Microsoft is set to release Activision’s Call of Duty: Black Ops 6 in October as the first major Call of Duty game to hit the Game Pass subscription service on day one. It’s also rumored to be preparing a portable Xbox console for release and has announced plans for next-gen Xbox consoles. Indiana Jones and the Great Circle is set to launch on PC and Xbox in December, with a PS5 release shortly after.
Image source: Microsoft.
Wesley is the UK News Editor for IGN. Find him on Twitter @wyp100. You can contact Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
