Microsoft is laying off a further 650 staff from its gaming business, according to a memo sent by Xbox chief Phil Spencer to staff today, September 12, and obtained by IGN.
In the memo, Spencer said the roles affect mostly corporate and support functions, and were made “to organize our business for long term success.” He clarified that no games, devices or experiences are being canceled and no studios are being closed as part of these cuts.
These latest layoffs mean Microsoft has let go of 2,550 staff from its gaming business since acquiring Activision Blizzard for $69 billion in 2023. In his memo, below, Spencer makes it clear that the cuts are related to the acquisition.
Phil Spencer’s email to staff is reproduced in full below:
For 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 post-acquisition team structure and managing our business, 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.
I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the U.S., we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the U.S. packages will differ according to location.
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. No games, devices 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 we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.
Phil
These cuts follow the already eye-watering 1,900 layoffs Microsoft made to its gaming business earlier this year, and continue the video game industry’s torrid time of late. Microsoft closed Hi-Fi Rush developer Tango Gameworks and Redfall developer Arkane Austin as part of those cuts. Speaking to IGN in June, Spencer said: “I have to run a sustainable business inside the company and grow, and that means sometimes I have to make hard decisions that frankly are not decisions I love, but decisions that somebody needs to go make.”
While Spencer has insisted Microsoft’s video game franchise “are getting stronger”, and Xbox console players “are as high this year as they’ve ever been,” the gaming business is now bringing a number of its games to rival platforms, including PlayStation 5.
Xbox hardware sales were way down again in Microsoft’s Q4, the latest financial quarter we have figures for, while gaming content sales skyrocketed again thanks to the company’s acquisition of Activision Blizzard. Gaming revenue overall appears to be doing more than fine in terms of year-on-year comparisons, even setting quarterly records, but this was largely due to the boost offered by Activision Blizzard (it wasn’t there to make money for the company last year, now it is, so the numbers have gone up). Gaming revenue was up 44% year-over-year, but with 48 points of net impact from the acquisition, which indicates that Xbox’s not-Activision Blizzard-related business isn’t doing as well as it was last year. Xbox content and services revenue faired better, up 61% year-over-year, with 58 points of net impact from the acquisition.
Overall, Microsoft’s More Personal Computing division (which includes Xbox as well as other segments such as Windows) brought in $15.9 billion in revenue, up 14% year-over-year, during Q4.
Speaking in August, Spencer said that Xbox’s multiplatform push is in part about bringing in more money to Microsoft’s gaming business — with the pressure now on to deliver following Microsoft’s acquisition of Call of Duty maker Activision Blizzard.
“And we run a business,” Spencer said. “It’s definitely true inside of Microsoft the bar is high for us in terms of the delivery we have to give back to the company. Because we get a level of support from the company that’s just amazing and what we’re able to go do.
“So I look at this, how can we make our games as strong as possible? Our platform continues to grow, on console, on PC, and on cloud. It’s just going to be a strategy that works for us.”
Microsoft is set to launch Activision’s Call of Duty: Black Ops 6 in October as the first mainline Call of Duty game to hit its Game Pass subscription service day-one. It is heavily rumored to be preparing an Xbox handheld for release, and has announced plans to release next-gen Xbox consoles. Indiana Jones and the Great Circle launches on PC and Xbox this December, with a PS5 release set to follow soon after.
Image credit: Microsoft.
Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.