Phil Spencer, executive vice president at Microsoft, speaks at the company’s Xbox One X event ahead of the E3 Electronic Entertainment Expo in Los Angeles on June 11, 2017.
Patrick T. Fallon | Bloomberg Getty Images
Microsoft there is said to be cutting 650 roles in its Xbox game division, in the latest major round of layoffs to hit the video game industry.
It marks the third series of redundancies at Microsoft’s video game unit since the company’s blockbuster acquisition of Activision Blizzard, the publisher behind the Call of Duty franchise, for $69 billion in cash.
The US tech giant confirmed to CNBC that it is cutting hundreds of roles at Xbox, in “mostly corporate and support functions.”
Bloomberg News reported the development earlier on Thursday.
In a memo obtained by CNBC, Phil Spencer, CEO of Microsoft Gaming, told employees that the company has taken this “difficult” decision to align the team structure post-acquisition and “position the business for long-term success.”
“We are very grateful for the contributions of our colleagues who learned that they were affected,” Spencer said in the memo.
“In the US, we support them with an exit package that includes severance, comprehensive health care, and outplacement services to help with the transition; outside the US the package will vary by location.”
Microsoft’s gaming chief added that there will be “some impact to other teams as they adapt to changing priorities and managing game lifecycles and performance.”
They confirmed that no games, devices or gaming experiences have been cancelled, and that no studios have been closed due to redundancy.
Microsoft has cut costs on Xbox in an effort to make a big takeover from Activision and drive more investment in sustainable gaming.
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 is not just a game titan slashing jobs. Major game studios have cut thousands of jobs worldwide, starting in 2023 and continuing through 2024.
In February, Japan Sony announced it lay off 900 workers from its PlayStation unit.
Gaming software firm Unity, Amazon-owned live streaming service Twitch, mobile game publisher Playtika, and social platform Discord have also announced many layoffs.
However, redundancy has become brutal on the Xbox. Microsoft cut 1,900 jobs in its gaming division in January, just three months after closing its acquisition of Activision Blizzard.
In May, the company announced the closure of several game studios, including Arkane Austin, Tango Gameworks, and Alpha Dog. Some employees have also been laid off as part of the shutdown, although Microsoft has not announced how many jobs will be affected by the move.
You can read the full memo from Phil Spencer, CEO of Microsoft Gaming, below:
Subject: Changes in Microsoft Gaming
For the past year, the goal has been to minimize disruption while welcoming the new team and to be able to do the best work possible. As part of realigning our post-acquisition team structure and managing the business, we have made the decision to eliminate approximately 650 roles at Microsoft Gaming—mostly corporate and support functions—to manage the business for long-term success.
I know this is hard news to hear. We are very grateful for the contributions of our colleagues who learned that they were affected. In the US, we support them with exit packages that include severance, comprehensive health care, and outplacement services to help with the transition; Outside the US packages will vary by location.
With these changes, the team and resources of the company and supporters are aligned for sustainable growth in the future, and can better support the studio team and business units with programs and resources that can meet their needs. Separately, as part of the business, there is some impact on other teams when adapting to changing priorities and managing the life cycle and performance of the game. No games, devices or experiences have been canceled and no studios have been closed as part of the current arrangement.
Throughout the history of our team, we have had good moments, and we have had challenging times. Today was one of those challenging days. I know that going through another change like this is difficult, but even in the most difficult times, this team has been able to come together and show each other care and kindness while we can continue to deliver for our players. We thank you for your support as we go through this transition and thank you for your compassion and respect for each other.
Phil
