Shocking layoffs in the gaming industry at Microsoft have hit Activision Blizzard teams responsible for mobile games Call of Duty Warzone Mobile and Warcraft Rumble, sources report.
Yesterday, Xbox boss Phil Spencer sent a memo to employees, reviewed by IGN, detailing another 650 layoffs in Microsoft’s gaming division. These layoffs follow 1,900 earlier this year and bring the total to a staggering 2,550 since Microsoft acquired Activision Blizzard for $69 billion last year.
Although Spencer assured that no games were canceled or studios were closed this time, Game file reports that Activision Blizzard’s development teams behind Call of Duty, Warzone Mobile, and Warcraft Rumble have suffered losses.
Call of Duty Warzone Mobile launched in March on iOS and Android as a mobile Call of Duty experience designed specifically for Warzone, featuring a battle royale mode for up to 120 players, as well as cross-progression with Warzone on PC and console, Modern Warfare 2 and 3, and the upcoming Black Ops 6. IGN’s Call of Duty Warzone Mobile review returned an 8/10. We said, “Call of Duty: Warzone Mobile takes all the best elements of Warzone and makes gameplay faster and more streamlined, and leverages cross-progression to make it a meaningful expansion of the traditional experience.”
Activision had hoped that Warzone Mobile would make a splash in the competitive mobile shooter market, where the wildly successful Call of Duty Mobile, developed by Tencent’s TiMi Studio Group, is already well-established. In the case of Call of Duty Mobile, which has logged 650 million downloads since launch, revenue is split between Activision and Tencent. Call of Duty Warzone Mobile, on the other hand, is developed entirely within Activision, so the company gets a bigger slice of the cash pie every time a player spends cash on a battle pass or cosmetic item.
However, it seems that Call of Duty Warzone Mobile did not live up to Activision’s expectations. Stephen Totilo of Game File said: that Warzone Mobile “hasn’t been as successful as expected” and that while the game will remain online, its team “will be reduced.”
Spencer mentioned Warzone Mobile’s issues in his note, without mentioning the game itself: “Separately, as part of running the business, there are some impacts on other teams as they adapt to changing priorities and manage the lifecycle and performance of games.”
Similarly, Blizzard’s Warcraft Rumble team is being hit by layoffs. Warcraft Rumble launched as a free-to-play mobile tower defense game in 2023 for iOS and Android, and while it started off well, interest has apparently waned. Warcraft Rumble is now transitioning from launch to post-launch live operations, but will remain online.
Activision Blizzard’s recent struggles in the mobile market call into question Microsoft’s acquisition of the company itself, given that Spencer has made no secret that the decision to buy the company was partly motivated by Xbox’s lofty ambitions in mobile (Activision Blizzard owns King, creator of the phenomenally popular mobile game Candy Crush). Indeed, Microsoft plans to launch its own app store, taking on Apple and Google in the lucrative mobile gaming space.
Xbox hardware sales fell again in Microsoft’s fourth quarterlast fiscal quarter for which we have data, while gaming content sales have once again surged thanks to Activision Blizzard. Gaming revenue overall appears to be more than fit 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, now it is, so the numbers are up).
Gaming revenue rose 44% year over year, but with a 48% net gain from the acquisition, indicating that the non-Activision Blizzard Xbox business is not doing as well as it did last year. Xbox content and services revenue fared better, rising 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.
Speaking in August, Spencer said Xbox’s controversial cross-platform initiative is partly aimed at attracting more money to Microsoft’s gaming division — now, after Microsoft’s acquisition of Activision Blizzard, the producer of Call of Duty, the pressure is on.
“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 preparing to launch Activision 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. Rumor has it that it is preparing Xbox portable console for release and announced plans to release next-generation Xbox consoles. Indiana Jones and the Big Wheel will be released on PC and Xbox in December, with a PS5 version scheduled to follow shortly after.
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.