Microsoft To Cut 650 Jobs From Xbox Division After $69bn Merger

Microsoft, the owner of Xbox, has announced plans to cut around 650 jobs from its gaming division following its $69 billion (£54.3 billion) merger with Activision-Blizzard.

The layoffs will mostly affect employees in corporate and support roles worldwide.

This marks the second wave of job cuts at Microsoft this year.

In January, the company laid off 1,900 workers and closed four studios in May, which it had acquired before its purchase of Call of Duty maker Activision-Blizzard.

In a memo to employees, Xbox head Phil Spencer reassured staff that no games, devices, or experiences were being cancelled as a result of the cuts.

He emphasized that the job reductions were part of a larger effort to “align” the company’s team structure after the recent acquisition, aiming for long-term success.

Spencer acknowledged that while no games or studios would be directly impacted, other teams might experience changes as they adjust to new priorities. He thanked the affected workers for their contributions and acknowledged the difficulty of the news.

The gaming industry has seen widespread layoffs over the past two years, following a period of growth during the COVID-19 pandemic. Companies like Sony, Riot Games (creator of League of Legends), and Fortnite maker Epic have also reduced their workforce.

Earlier this year, Microsoft faced criticism for shutting down renowned studios Arkane Austin and Tango Gameworks.

Despite these challenges, Spencer stressed in a June interview with gaming site IGN that he was expected to maintain a “sustainable” gaming business and continue showing growth.

In Microsoft’s latest financial report, the company revealed that gaming revenues had increased, largely thanks to its acquisition of Activision-Blizzard, the studio behind World of Warcraft, Diablo, and Overwatch.

However, sales of Xbox hardware have fallen since last year, prompting the company to focus on expanding its software sales.

Xbox recently showcased a lineup of upcoming games, including Call of Duty: Black Ops 6, receiving praise for one of its strongest presentations in years. However, fans have been frustrated by recent price hikes for Xbox’s Game Pass service and announcements that certain games will be released on rival consoles like PlayStation and Nintendo Switch.