Phil Spencer, Microsoft's executive vice president, speaks at the Xbox One X reveal event ahead of the Electronic Entertainment Expo (E3) in Los Angeles on June 11, 2017.
Patrick T. Fallon | Bloomberg | Getty Images
Microsoft Sony Corp said Thursday it will lay off 650 employees at its Xbox gaming division, the latest major round of layoffs to hit the video game industry.
This marks the third series of layoffs at Microsoft's video game unit since the company acquired Activision Blizzard, the publisher behind the Call of Duty franchise, for $69 billion in cash.
The US tech giant confirmed to CNBC that it will cut hundreds of jobs at Xbox, “mostly in corporate and support roles.”
Bloomberg News reported the development earlier on Thursday.
In a memo obtained by CNBC, Microsoft Gaming CEO Phil Spencer told employees that the company made the “difficult” decision to align its post-acquisition team structure and “align our business for long-term success.”
“We are deeply grateful for the contributions of our colleagues who learned they were impacted,” Spencer said in the memo.
“In the US, we support them with exit packages that include severance pay, extended health care, and reemployment services to help with their transition; outside the US, packages will vary by location.”
Microsoft's gaming chief added that there will be “some impacts on other teams as they adapt to changing priorities and manage the lifecycle and performance of games.”
He confirmed that no games, hardware or gaming experiences were cancelled, and no studios were closed as a result of the layoffs.
Microsoft has been cutting costs at Xbox in an effort to make its massive acquisition of Activision and its broader investment campaign in gaming sustainable.
The company previously bought ZeniMax Media, owner of Bethesda Softworks, for $7.5 billion in 2021. Bethesda publishes major game titles, such as the Fallout series and The Elder Scrolls.
Microsoft isn’t the only gaming giant cutting jobs. Major game studios are cutting thousands of jobs worldwide, starting in 2023 and continuing through 2024.
In February, Japan Sony It announced that it will lay off 900 workers from the PlayStation unit.
Gaming software company Unity, Amazon-owned streaming service Twitch, mobile game publisher Playtika, and social media platform Discord have all announced major rounds of layoffs.
But the layoffs have been particularly severe at Xbox. Microsoft laid off 1,900 employees from its gaming division in January, just three months after completing its acquisition of Activision Blizzard.
In May, the company announced that it would close a number of game studios, including Arkane Austin, Tango Gameworks, and Alpha Dog. Several employees were also laid off as part of the closures, though Microsoft did not disclose how many jobs were affected.
You can read the full note from Phil Spencer, CEO of Microsoft Gaming, below:
Subject: Changes to Microsoft Gaming
Over the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our team structure post-acquisition and managing our business, we have made the decision to eliminate approximately 650 Microsoft Gaming roles—mostly corporate and support roles—to position our business for long-term success.
I know this is hard news to hear. We are so grateful for the contributions of our colleagues who know they are impacted. In the U.S., we are supporting them with exit packages that include severance pay, extended health care, and reemployment services to help them transition; outside the U.S., packages will vary by location.
With these changes, our teams, corporate resources, and support are aligned for sustainable future growth, and can better support our studio teams and business units with software and resources that can scale to meet their needs. Separately, as part of managing the business, there are some impacts on other teams as they adapt to changing priorities and manage the lifecycle and performance of games. No games, hardware, or experiences are being cancelled, and no studios are being closed as part of these adjustments today.
Throughout our team’s history, we have had great moments and difficult ones. Today is one of those difficult days. I know that going through these changes is difficult, but even in the most difficult times, this team has been able to come together and show care and kindness to each other as we continue to do the best for our players. We appreciate your support as we navigate these changes and thank you for your compassion and respect for one another.
elephant
