The video game industry continues to go through an absolutely brutal string of layoffs, sparked in part by mass hiring during the gaming surges of Covid, but now shrinking back, leaving thousands of workers out in the cold. Now, it’s Microsoft swinging the axe, cutting 8% of its gaming division, which now includes Activision Blizzard.
In all, 1,900 employees are being cut, the bulk of which are from Activision Blizzard, less so from Xbox and Zenimax/Bethesda. Employees there hoped that life would be getting better under Microsoft and after the departure of CEO Bobby Kotick, but for many, that is now proving not to be the case.
The layoffs were confirmed by an internal memo from Phil Spencer (via The Verge):
“It’s been a little over three months since the Activision, Blizzard, and King teams joined Microsoft. As we move forward in 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business. Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth.
As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1900 roles out of the 22,000 people on our team. The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible. The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax and the Xbox teams, and they should be proud of everything they’ve accomplished here. We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues. We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws. Those whose roles will be impacted will be notified, and we ask that you please treat your departing colleagues with the respect and compassion that is consistent with our values.
Looking ahead, we’ll continue to invest in areas that will grow our business and support our strategy of bringing more games to more players around the world. Although this is a difficult moment for our team, I’m as confident as ever in your ability to create and nurture the games, stories and worlds that bring players together.
While much of this is yes, likely due to complications on all sides from the Covid years, it’s also possible to imagine why some of these cutbacks are happening outside of that, specifically at Activision Blizzard. There may be some redundancies with the acquisition, but past that, this is the first year a Call of Duty game was outsold be a non-Rockstar release, as Hogwarts Legacy beat it out. Blizzard has struggled with Overwatch 2 for a while now. Diablo 4 was a sales hit but is trying to find its footing as a profitable live service. Elsewhere within the gaming division, 2023’s Starfield had a lot of players, but a somewhat tepid reception for a mainline Bethesda game built up with years of hype.
Past that, Xbox has thrown all its chips into Game Pass, where growth there may be hitting a ceiling. Attempting to expand it to more devices via cloud gaming is a tall order in places with unstable internet like the US and in many ways the tech just isn’t fully there yet.
All this said, this is not some giant “win” for PlayStation, and should not be framed as such for console war purposes. Sony has also laid of a number of people in its own gaming division. Newly acquired Bungie laid off 8% of its staff in late October of last year, which was over 100 people by itself. The scale of Microsoft’s layoffs are larger, but it’s a larger company. Sony’s struggles, meanwhile, are figuring out how to expand its reach past a limited number of PS5s. So there are problems all around with these major players.
1,900 jobs lost in an instant adds to a total of thousands more in 2024, where we’re only 3+ weeks into the year. A complicating factor is that those being laid off are having more trouble finding work because everyone is cutting back, so there are not always new jobs to leap to. We’ll have more information about who exactly was impact here soon.
Update: Mike Ybarra, President of Blizzard, is leaving the company:
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