Microsoft to cut 650 jobs at its Xbox gaming unit — read the full memo from top exec Phil Spencer

Posted by Admin September 12, 2024 Jobs

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Phil Spencer, executive vice president at Microsoft, speaks at the company’s Xbox One X reveal event ahead of the E3 Electronic Entertainment Expo in Los Angeles on June 11, 2017.

Patrick T. Fallon | Bloomberg | Getty Images

Microsoft on Thursday said that it is cutting 650 roles at its Xbox gaming division, in the latest major round of layoffs to hit the video game industry.

It marks the third series of redundancies in Microsoft’s video game unit since the company’s blockbuster acquisition of Activision Blizzard, the publisher behind the Call of Duty franchise, for $69 billion in cash.

The U.S. tech giant confirmed to CNBC that it is cutting hundreds of roles at Xbox, in “mostly corporate and supporting functions.”

Bloomberg News reported the development earlier on Thursday.

In a memo obtained by CNBC, Phil Spencer, CEO of Microsoft Gaming, told employees that the firm had taken this “difficult” decision to align its post-acquisition team structure and “organize our business for long term success.”

“We are deeply grateful for the contributions of our colleagues who are learning they are impacted,” Spencer said in the memo.

“In the US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US packages will differ according to location.”

Microsoft’s gaming chief added that there would be “some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games.”

He stressed that no games, devices or gaming experiences were being cancelled, and that no studios are being closed as a result of the redundancies.

Microsoft has been cutting back on costs at Xbox in an effort to make its mammoth takeover of Activision and its broader investment drive on gaming sustainable.

The company previously purchased ZeniMax Media, the owner of Bethesda Softworks, for $7.5 billion in 2021. Bethesda publishes major gaming titles, such as the Fallout and The Elder Scrolls series.

Microsoft isn’t the only gaming titan slashing jobs. Major gaming studios have cut thousands of jobs around the world, beginning in 2023 and continuing into 2024.

In February, Japan’s Sony announced it was laying off 900 workers from its PlayStation unit.

Gaming software firm Unity, Amazon-owned livestreaming service Twitch, mobile game publisher Playtika, and social platform Discord have also announced substantial rounds of layoffs.

Redundancies have nevertheless been particularly brutal at Xbox. Microsoft cut 1,900 jobs in its gaming division in January, just three months after closing its acquisition of Activision Blizzard.

In May, the company announced it was closing a number of gaming studios, including Arkane Austin, Tango Gameworks, and Alpha Dog. Several employees were also laid off as part of the shutdowns, although Microsoft has not disclosed how many jobs were affected by these measures.

You can read the full memo from Phil Spencer, CEO of Microsoft Gaming, below:

Subject: Changes to Microsoft Gaming

For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming—mostly corporate and supporting functions—to organize our business for long term success.

I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US packages will differ according to location.

With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today.

Throughout our team’s history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.

Phil