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Microsoft cuts 650 jobs in Xbox gaming division

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

Patrick T. Fallon | Bloomberg |

Microsoft announced Thursday that it is cutting 650 jobs in the company's Xbox gaming division as part of the latest major layoffs in the video game industry.

This is the third wave of layoffs in Microsoft's video game division since it acquired Activision Blizzard, publisher of the Call of Duty series, for $69 billion in cash.

The US technology giant confirmed to CNBC that it is cutting hundreds of jobs at Xbox, “primarily in corporate and support functions.”

Bloomberg News had already reported on the development on Thursday.

In a memo obtained by CNBC, Microsoft Gaming CEO Phil Spencer told employees that the company made this “difficult” decision to realign its team structure following the acquisition and “position our business for long-term success.”

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

“In the U.S., we support them with exit packages that include severance pay, extended health insurance benefits and outplacement services to ease their transition. Outside the U.S., packages vary by location.”

Microsoft's gaming chief added that there will be “some impact on other teams as they adapt to changing priorities and manage the lifecycle and performance of games.”

He stressed that there would be no cancellation of games, devices or gaming experiences and that no studios would be closed due to the layoffs.

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Microsoft has cut costs at Xbox to sustain its massive acquisition of Activision and its broader investment drive in gaming.

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

Microsoft isn't the only gaming giant cutting jobs. Major gaming studios have cut thousands of jobs worldwide, starting in 2023 and continuing through 2024.

In February Sony announced that it would lay off 900 employees from its PlayStation division.

Gaming software company Unity, Amazon-owned livestreaming service Twitch, mobile game publisher Playtika and social platform Discord have also announced extensive layoffs.

The layoffs were particularly brutal at Xbox, however. Microsoft cut 1,900 jobs in its gaming division in January, just three months after completing its acquisition of Activision Blizzard.

In May, the company announced that it would close a number of game studios, including Arkane Austin, Tango Gameworks and Alpha Dog. Several employees were also laid off as part of the closures, although Microsoft did not disclose how many jobs were affected by these measures.

Below you can read the full memo from Phil Spencer, CEO of Microsoft Gaming:

Subject: Changes to Microsoft Gaming

Over the past year, our goal has been to minimize disruption, onboard new teams, and enable them to do their best work. As part of restructuring our team structure following the acquisition and managing our business, we have decided to eliminate approximately 650 positions at Microsoft Gaming – primarily corporate and support roles – to position our business for long-term success.

I know this is difficult news. We are deeply grateful for the contributions of our colleagues who learn they are impacted. In the U.S., we are supporting them with severance packages that include severance pay, extended health insurance and outplacement services to help them make the transition. Outside the U.S., packages vary by location.

With these changes, our corporate and support teams and resources are positioned for sustainable future growth and can better support our studio teams and business units with programs and resources that adapt to their needs. That said, as part of running the business, there is some impact to other teams as they adapt to changing priorities and manage the lifecycle and performance of games. As part of these adjustments, no games, devices, or experiences are being canceled today, and no studios are being closed.

Throughout our team's history, there have been great moments, but also challenging ones. Today is one of those challenging days. I know it's hard to go through more changes like this, but even in the most difficult times, this team has managed to stick together and show care and kindness to one another as we work to continue to provide the best for our players. We appreciate your support as we navigate these changes, and thank you for your compassion and respect for one another.

Phil

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