Microsoft has announced the layoff of 1,900 employees from its gaming division, representing a significant 8% reduction in its workforce. This decision, reported by The Verge, follows the tech giant's landmark acquisition of Activision Blizzard, the esteemed producer of "Call of Duty."
The announcement was made in a memo from Phil Spencer, who leads Microsoft's gaming division. Spencer explained that the layoffs were an outcome of the integration of Activision Blizzard into Microsoft, a process that revealed several synergies and overlapping functions within the gaming business. This department, inclusive of the Xbox division, employs a substantial 22,000 personnel.
Spencer detailed the company's rigorous approach to aligning priorities and identifying redundancies, aimed at fostering a sustainable and growth-oriented cost structure. The vision, as per Spencer, is to cultivate a gaming business robust enough to navigate and thrive in the competitive landscape.
Simultaneously, the gaming community was taken aback by the announcement of Blizzard president Mike Ybarra's departure. Ybarra, expressing his support for the impacted employees, marked the end of his tenure at the company through a social media statement.
The acquisition of Activision Blizzard, completed in January 2022, was a strategic move that escalated Microsoft to the rank of the world's third-largest gaming company by revenue. The deal, however, was not devoid of regulatory challenges. It faced intense scrutiny, especially in the U.S., and initially encountered resistance from Britain's regulatory body over concerns related to cloud gaming competition. Despite these hurdles, the deal was successfully executed.
These layoffs at Microsoft are indicative of a larger trend in the tech industry, where major companies have been downsizing since late 2022. This wave of layoffs, continuing into early 2024, reflects the sector's adaptive strategies in response to evolving market demands and the need for more efficient operational structures.
