- Microsoft announced it is cutting 1,900 roles within its gaming division, marking the latest round of job layoffs in the tech industry.
- The layoffs affect about 9% of the 22,000 employees in Microsoft Gaming, which includes Xbox and the recently acquired Activision Blizzard, the maker of popular games like Call of Duty and Candy Crush.
- The company said the move was part of a plan to reduce areas of overlap and streamline its operations, as it integrates Activision Blizzard into its business.
Why it matters: Microsoft’s $69 billion acquisition of Activision Blizzard was the largest deal in the gaming industry, and one of the biggest in tech history. The deal gave Microsoft access to some of the most popular and profitable gaming franchises, as well as a huge user base and a strong presence in mobile gaming.
The big picture: Microsoft is not the only tech giant that is shedding jobs in 2024. Earlier this week, eBay and SAP announced they would lay off 1,000 and 8,000 workers, respectively, as they face increasing competition and pressure from the market. The tech sector has also been hit by the Covid-19 pandemic, the supply chain crisis, and the regulatory scrutiny, which have affected its performance and outlook.
By the numbers:
- Microsoft’s gaming revenue grew by 13% to $15.4 billion in 2023, driven by strong demand for its Xbox consoles and cloud gaming services, according to its latest earnings report.
- Activision Blizzard’s net revenue fell by 7% to $8.1 billion in 2023, as it faced backlash from gamers and regulators over its workplace culture and business practices, according to its latest earnings report.
- Microsoft’s stock price rose by 0.2% to $338.22 on Wednesday, while Activision Blizzard’s stock price fell by 0.4% to $95.18, according to MarketWatch.
What they’re saying:
- “We are making these changes to align our teams and resources to best serve our customers and achieve our long-term vision for gaming,” said Phil Spencer, CEO of Microsoft Gaming, in an internal memo obtained by CNBC.
- “We are saddened by the news of the layoffs at Microsoft Gaming. We stand in solidarity with our fellow workers who are affected by this decision, and we demand fair compensation and support for them,” said the Activision Blizzard King Workers Alliance, a group of employees advocating for unionization, in a tweet.
- “We are surprised by the extent of the layoffs at Microsoft Gaming. We expected some consolidation and restructuring after the Activision Blizzard deal, but not this much. We wonder how this will impact the quality and diversity of the games and services that Microsoft offers,” said Michael Pachter, an analyst at Wedbush Securities, in an email.
What’s next: Microsoft said it will provide full support, including severance and outplacement services, to the affected employees. The company also said it will continue to invest in its gaming business, and launch new games and features in 2024.
