Microsoft recently announced another round of layoffs, affecting approximately 650 employees in its Xbox gaming division. This decision, communicated by Xbox chief Phil Spencer through an internal memo, follows the company’s $68.7 billion acquisition of Activision Blizzard in October 2023.
The layoffs primarily impact corporate and support functions as part of a broader restructuring aimed at long-term success.
Despite the reductions, Spencer reassured employees that no games, studios, or experiences would be canceled or closed. The cuts are intended to better align resources and support Microsoft’s ongoing projects within its gaming unit.
Those affected will receive severance packages, extended healthcare, and transition support, with different terms for international employees. This marks the second significant reduction in 2024, following the dismissal of 1,900 staff earlier in the year.
These layoffs are part of Microsoft’s broader strategy to optimize its gaming operations post-merger, especially as it looks to integrate teams from Activision Blizzard and adjust to shifting priorities in game development and market performance.
Despite Xbox’s overall strong performance, including major titles like Call of Duty and Diablo IV, these adjustments highlight the company’s efforts to remain competitive and sustainable.
Here is the official memo issued by Phil Spencer
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.
Phil Spencer
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 US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US 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.
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