Microsoft made waves in the gaming industry when it acquired Activision Blizzard for $68.7 billion last year, but the ripples from that deal are now resulting in job losses. According to reports, Microsoft is laying off approximately 1,900 employees this week, representing nearly 9% of its overall gaming division.
Most of the layoffs target Activision Blizzard staff, which Microsoft officially brought under its umbrella in October 2022 after a protracted legal battle. However, some cuts are also impacting teams at Xbox and ZeniMax studios.
In an internal memo viewed by media outlets, Microsoft Gaming CEO Phil Spencer explained that the company leadership conducted a review over the past three months and is committed to “aligning on a strategy and an execution plan” between Microsoft and Activision Blizzard. This process identified “we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth” between the merged businesses.
While not explicitly stated, consolidating duplicated roles and eliminating redundancies seems to be the driving force behind this week’s job cuts and is often standard for companies post-merger. An unnamed Blizzard survival game that was previously announced has now been cancelled. Spencer said affected staff from that project may be reassigned to other promising titles in active development.
This sweeping round of layoffs comes during a period when many tech firms and game developers are similarly downsizing their workforces. Companies such as Google, Twitch, Unity, and Riot Games have all announced staff reductions in response to economic instability and rising interest rates in 2023/2024.
For Microsoft, integrating a publisher as large as Activision Blizzard was always guaranteed to cause some growing pains. But the speed at which these layoffs have happened suggests major restructuring is underway to refocus how Microsoft leverages its new gaming assets.
Call of Duty, World of Warcraft, and other Activision franchises now have immense value under Microsoft’s guidance. Expect to see greater emphasis on expanding those brands across Xbox and PC platforms in the months and years to come. With Sony and Tencent also making big plays in the gaming space, Microsoft faces intense competition and will aim to use Activision’s IP to gain an edge.
