Microsoft is laying off 650 employees from its gaming division, marking the latest round of cuts since the company’s $68.7 billion acquisition of Activision Blizzard. The layoffs follow a previous reduction of 1,900 roles in the division, which occurred eight months ago.
Post-Acquisition Restructuring
In an internal memo, Xbox chief Phil Spencer explained that the layoffs are part of the company’s efforts to align its post-acquisition team structure and manage business operations effectively. “We have made the decision to eliminate approximately 650 roles across Microsoft Gaming — mostly corporate and supporting functions — to organize our business for long-term success,” Spencer noted.
Despite the workforce reductions, Spencer assured that no games, devices, or experiences are being canceled. He also confirmed that no additional studios would be closed, a key concern after the closure of Tango Gameworks and Arkane Austin following the last round of layoffs.
Strategic Moves for Long-Term Success
Microsoft’s layoffs reflect the company’s broader strategy to streamline its gaming division while ensuring that it remains positioned for future growth. While the layoffs primarily affect corporate and support roles, the company remains committed to its gaming projects and studios, with no plans to halt ongoing developments.
This latest move underscores Microsoft’s focus on aligning its gaming division with its post-Activision acquisition goals as it continues to reshape its business for long-term success.
Impact on Xbox team
The layoffs at Microsoft, particularly the 650 roles eliminated from the gaming division, will have several notable impacts on the Xbox team, though direct game development seems unaffected.
1. Restructuring and Realignment
The layoffs are part of Microsoft’s post-Activision Blizzard acquisition strategy, focusing on realigning corporate and support roles rather than the core game development teams. This suggests that while developers working on games and new content may not be impacted, the broader administrative, marketing, and management teams within Xbox could face disruptions.
2. Pressure on Remaining Teams
With the elimination of corporate and supporting functions, there could be increased pressure on the remaining staff to pick up additional responsibilities, particularly in non-game-specific areas like marketing, partnerships, and operations. This may affect workflow efficiency and internal processes in the short term as teams adjust.
3. Focus on Long-Term Success
Phil Spencer’s memo emphasized organizing for “long-term success,” signaling that the Xbox team is expected to remain central to Microsoft’s gaming strategy. Despite the layoffs, Microsoft’s continued focus on major releases and sustaining existing studios means the core of Xbox’s game development and hardware teams remains intact. However, with fewer support staff, the operational side of managing games, Xbox Game Pass, and related services might experience strain.
4. Studio Stability
The memo confirmed that no additional studios would be closed after the previous closure of Tango Gameworks and Arkane Austin. This reassurance means the remaining Xbox game studios can focus on their projects without concerns of further shutdowns. However, the ongoing need to integrate Activision Blizzard into the larger Xbox team could create additional challenges for studio coordination and support.
5. Morale and Company Culture
While direct game development isn’t being immediately affected, the layoffs could influence overall morale within the Xbox team. A reshuffling of roles and a reduction in staff may generate uncertainty, potentially impacting team dynamics and focus.
In summary, the layoffs mainly target supporting roles, which could lead to operational inefficiencies, but the Xbox team remains core to Microsoft’s gaming future. The long-term goal is to maintain growth and innovation, particularly after the Activision acquisition, even as short-term disruptions and challenges persist.
