Microsoft cuts 1,900 jobs in its video game division

Microsoft cuts 1,900 jobs in its video game division

Microsoft said Thursday it will eliminate 1,900 roles in its video game division, including Activision Blizzard, which it acquired three months ago for $69 billion.

According to a staff memo from Microsoft gaming head Phil Spencer obtained by The New Yorker, there will be job cuts at Activision Blizzard, maker of hit games like Call of Duty and Guitar Hero, as well as Xbox. Times.

The cuts represent about 9 percent of Microsoft’s 22,000-person video game division, but less than 1 percent of the company’s roughly 220,000 employees overall.

“Looking forward, we will continue to invest in areas that will grow our business and support our strategy of bringing more games to more players around the world,” Mr. Spencer said in the memo.

This month, thousands of workers in the video game industry have been told they face layoffs, as the pandemic boom in gaming continues to dwindle.

Riot Games, the company that makes League of Legends, said it will lay off about 11 percent of its workforce. Amazon-owned video streaming platform Twitch, which is heavily used by gamers, announced it will cut 35 percent of its staff. Discord, gamers’ beloved social platform, is cutting its ranks by 18 percent. And Unity Software, which provides software for game developers, said it was cutting a quarter of its workforce, or about 1,800 jobs. Last year also all of them were retrenched.

Piers Harding-Rolls, gaming researcher at analytics firm Ampere Analysis, said some changes were expected at Activision Blizzard after the acquisition, but the extent of the cuts was “unprecedented” in the industry.

“I’m really surprised by the scale and extent of the number of companies laying off people in the new year,” he said. “It seems like a lot of companies waited until the end of the year and started work in January.”

At Microsoft, gaming has become the company’s most important consumer business, with annual sales exceeding $15 billion, primarily under the Xbox brand. The company’s ambitions became clear two years ago, when it announced a blockbuster deal to acquire Activision, whose valuation had fallen due to concerns about its workplace culture, which the company rejected.

The deal faced intense regulatory scrutiny around the world, and the company had to delay the closing date from last summer to October. Meanwhile, as the world reopened after the pandemic subsided, consumers started going out again instead of staying home and playing. Microsoft’s gaming revenue fell That’s up $764 million, or 5 percent, from its last fiscal year ended June 30.

Bobby Kotick, who led Activision Blizzard since 2008 and built it into a powerhouse, left the company late last year. Mike Ybarra, President of Blizzard Entertainment, announced Thursday will be his last day at the company on social media platform X.

Mr. Ybarra wrote, “Having already spent 20+ years at Microsoft and with the Activision Blizzard acquisition behind us, it is time for me to (once again) become Blizzard’s biggest fan.”

there was a layoff informed of First by The Verge. Microsoft declined to comment.

The video game industry is “suffering from the cold right now,” said Joost van Drunen, a New York University professor who studies the gaming business.

This year is expected to be a slower one for the industry than 2023, which had a series of blockbuster releases like The Legend of Zelda: Tears of the Kingdom and the Resident Evil 4 remake.

Meanwhile, companies are laying off workers and cutting costs to stay competitive. “If everyone around you is cutting their overhead and you don’t, you’re going to incur the wrath of your shareholders at some point,” Mr. Van Drunen said.

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