Microsoft has announced another round of layoffs this year. The company will cut around 650 roles across its gaming division.
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UPDATE (September 13): One of the sources told Stephen Totilo that the layoffs will affect developers working on Warcraft Rumble and Call of Duty Warzone Mobile. It looks like the games didn’t live up to the company’s expectations, but there are currently no plans to shut them down.
Phil Spencer shared the news in an email to employees, Game File reported on September 12. The Microsoft Gaming CEO cited “aligning our post-acquisition team structure” as the main reasons behind the job cuts.
He noted that this move will affect “mostly corporate and supporting functions.” As one source told Game File, the layoffs will be made at Activision Blizzard, which Microsoft acquired for $69 billion last year.
According to Spencer, Microsoft needs to needs to “minimize disruption” after brining thousands of ABK workers into its corporate structure. With the new job cuts, the company plans to organize its business for long-term growth.
With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. CEO of Microsoft Gaming
Spencer stressed that “no games, devices, or experiences” will be canceled as part of these layoffs. Microsoft also won’t be closing any game studios or cutting executive roles.
In January, the company laid off 1,900 employees across its gaming division. The cuts affected people who worked at Blizzard Entertainment, Activision, Infinity Ward, Sledgehammer Games, and other studios.
In May, Microsoft closed several first-party studios, including Arkane Austin and Tango Gameworks. The latter was eventually acquired by Krafton, along with the rights for the Hi-Fi Rush IP.
It is worth noting that Activision Blizzard has been driving Microsoft’s gaming revenue growth over the past several quarters. The Call of Duty maker generated $5.72 billion for Microsoft in FY24, with an operating loss of $1.36 billion. The net impact of the deal on Xbox content and services revenue was 44 points, meaning that without Activision Blizzard, it would only have grown 6% year-over-year (instead of 50%).
For Q1 ending September 30, Microsoft expects its gaming revenue to grow in the mid-30% range. Excluding the net impact of Activision Blizzard, there would be a 10% decline.