Microsoft laid 1,900 employees in its gaming division, according to an internal memo seen by The Verge on Thursday, with a majority of the layoffs hitting its newly acquired Activision Blizzard employees. Some Xbox and ZeniMax employees were also affected, according to the memo. The layoffs come roughly three months after Microsoft closed a $US69 billion acquisition of Activision Blizzard.
Microsoft Gaming CEO Phil Spencer welcomed Activision, Blizzard, and King employees to his company on Oct. 13 in an email, telling them “Today is a good day to play.” Today, not so much, as Microsoft Gaming’s division is losing more than 8% of its 22,000 employees. Spencer sent a less joyous memo on Thursday morning detailing the “painful decision to reduce the size of our gaming workforce by approximately 1,900 roles.”
When Microsoft purchased Activision Blizzard, it received some of the world’s biggest game franchises, including Call of Duty, World of Warcraft, Diablo, and Candy Crush, just to name a few. The deal was held up by antitrust challenges from the Federal Trade Commission and the United Kingdom’s Commercial Markets Authority, concerned that Microsoft would stifle competition. However, the deal passed through. Activision Blizzard games have yet to be added to Microsoft’s game subscription service, Xbox Game Pass, but they might show up sometime in 2024.
In the midst of the layoffs, Blizzard President Mike Ybarra announced he would be stepping down in a tweet Thursday morning, alongside Blizzard’s co-founder and chief design officer, Allen Adham, according to The Verge. An upcoming Blizzard survival game has also been canceled, which was slated to be its first new IP for the developer since Overwatch in 2016.
The acquisition-to-layoffs pipeline is an unfortunate, but all-too-familiar story for video game developers. In September, Epic Games laid off tons of developers at the studio behind Fall Guys, Media Tonic, which it acquired in 2021. In May, Embracer shuttered the studio behind Saints Row, Volition, after making 20 acquisition deals the year before. For Activision Blizzard, the writing was on the wall.
However, before the deal was approved, Microsoft and Activision Blizzard executives beat the drums of acquisition. In 2022, Microsoft President Brad Smith said the deal would “create more opportunities for gamers and game developers.” In April 2023, Activision CEO Bobby Kotick said blocking this deal would actually “stifle investment, competition, and job creation” throughout the gaming industry.
Regulators largely focused on how the Activision Blizzard deal would stifle the gaming ecosystem, but today, we’re seeing antitrust concerns materialize in real time for game developers. Nearly 2,000 game developers lost jobs today, and there are three fewer gaming studios to hire them because of this acquisition. Not to mention, the video game industry has laid off over 5,800 developers this year, less than a month into 2024.
Microsoft became the second company ever to reach a $US3 trillion market valuation on Wednesday, just behind Apple. What a way to celebrate being one of the richest companies ever.