Microsoft announced a significant workforce reduction within its Xbox gaming unit.
The decision to cut 650 roles comes as part of the company’s ongoing efforts to streamline operations and align its post-acquisition team structure following the blockbuster purchase of Activision Blizzard for a staggering $69 billion.
Microsoft Job Cuts: The Context and The Decision
Microsoft’s gaming division has been in the spotlight due to its ambitious acquisitions. Notably, in 2021, the company acquired ZeniMax Media, the parent company of Bethesda Softworks, for $7.5 billion.
This move expanded Microsoft’s gaming portfolio, including popular franchises like Fallout and The Elder Scrolls.
In a memo obtained by CNBC, Phil Spencer, CEO of Microsoft Gaming, addressed employees, acknowledging the difficulty of the decision.
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The company is making these redundancies primarily in corporate and supporting functions within the Xbox division.
Importantly, no games, devices, or gaming experiences are being canceled, and no studios are closing as a result of these layoffs.
Spencer emphasized that the goal is to organize the business for long-term success.
While the job cuts are undoubtedly challenging for those affected, Microsoft is providing exit packages that include severance, extended healthcare, and outplacement services to support impacted employees.
Outside the United States, package details will vary based on location.
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Wrapping Up!
Microsoft isn’t alone in making such tough decisions. The video game industry has witnessed several rounds of layoffs globally, beginning in 2023 and continuing into 2024.
As companies adapt to shifting priorities and manage game lifecycles, cost-cutting measures have become necessary.
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