Microsoft announced on Thursday that it is cutting 650 positions in its video gaming division, Xbox, marking the latest round of layoffs in the US electronic gaming industry.
The head of Microsoft’s Xbox division, Phil Spencer, announced this news in a memo to employees on Thursday. This is the third round of layoffs in Microsoft’s gaming division since the company’s acquisition of the gaming company Activision Blizzard for $6.9 billion in cash last October.
Spencer stated in the memo, “As part of adjusting our post-acquisition team structure and managing operations, we have decided to eliminate approximately 650 positions across the entire Microsoft gaming division, most of which are related to corporate functions and support functions to align our business for long-term success.”
While acknowledging the impact on some teams within the company, Spencer assured that the current adjustments will not affect any games, hardware, or experiences, nor will they lead to the closure of any studios.
“I know this news is hard to accept,” Spencer wrote. “We are immensely grateful for the contributions of our affected colleagues. In the US, we are supporting them with departure packages including severance pay, extended healthcare benefits, and reemployment services; the packages will vary by location outside the US.”
Earlier this year, Microsoft laid off 1,900 employees from Activision Blizzard and the Xbox division, followed by the closure of four studios in May, which were acquired as part of Microsoft’s $7.5 billion acquisition of ZeniMax Media, the parent company of Bethesda Softworks, in 2021. However, Microsoft did not disclose how many people were affected by the closure of these studios.
The acquisition of Activision Blizzard by Microsoft injected new content and talent into the Xbox division, but ensuring long-term returns on this deal remains a challenge.
The gaming industry has faced a difficult year due to rising development costs and sluggish growth. From 2023 to 2024, major game studios worldwide have laid off thousands of employees.
In February of this year, Sony in Japan also announced the layoffs of 900 employees in its PlayStation division.
Furthermore, game software companies Unity, Twitch under Amazon, mobile game publisher Playtika, and social platform Discord have also announced large-scale layoff plans.