Microsoft Lays off 1,900 Employees From Activision Blizzard and Xbox - Represents 8% of Entire Workforce

Microsoft is cutting off 1,900 employees, representing about 8% of its 22,000-strong workforce. While most of these layoffs are affecting Activision Blizzard employees, unfortunately, some from Xbox and ZeniMax have also been caught up in it. This news comes three months after Microsoft closed its $69 billion dollar deal on Activision Blizzard, after a 20-month-long legal battle with regulators in the US and UK. Apart from this, there have been leadership changes within the Call of Duty studio, with Blizzard President Mike Ybarra deciding to leave the company. This announcement has certainly shocked many gamers who are wondering what the future of Xbox and its acquired studios will look like.

Microsoft Gaming CEO Phil Spencer Says They Will Provide Severance Benefits to Affected Employees

The CEO of Microsoft’s gaming division, Phil Spencer, handed out a memo to all employees, confirming the job cuts. He mentions that moving forward into 2024, Microsoft Gaming and Activision Blizzard are committed to executing a strategy that will focus on a sustainable cost structure to support the entirety of their gaming business. He says they have set priorities, identified areas of “overlap” and that the leadership team is aligned on the best opportunities to ensure growth. Here’s the rest of his memo:

“As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1900 roles out of the 22,000 people on our team. The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible. 

The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax and the Xbox teams, and they should be proud of everything they’ve accomplished here. We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues. 

We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws. Those whose roles will be impacted will be notified, and we ask that you please treat your departing colleagues with the respect and compassion that is consistent with our values.

Looking ahead, we’ll continue to invest in areas that will grow our business and support our strategy of bringing more games to more players around the world. Although this is a difficult moment for our team, I’m as confident as ever in your ability to create and nurture the games, stories and worlds that bring players together.”

After overseeing the acquisition through and through, Blizzard Entertainment’s President Mike Ybarra has now decided to leave the company. He spent 20 years working at Microsoft as an Xbox executive before joining Blizzard back in 2019. “The new Blizzard President will be announced next week,” said Matt Booty, the head of Xbox Game Studios. He also added:

“As we move forward, we will continue to build on the positive momentum that Mike created and strive to continue exceeding the expectations of Blizzard’s players. I want to thank Mike for his leadership and for his partnership and counsel since the deal closed. I know he plans to travel and spend more time with his family. We wish him the very best.”

Alongside the layoffs, Blizzard’s Chief Design Officer Allen Adham is also leaving the studio. The co-founder had a huge impact on numerous Blizzard titles like World of Warcraft, Diablo, Overwatch, etc. “His influence will be felt for years to come, both directly and indirectly as Allen plans to continue mentoring young designers across the industry,” said Booty in the internal memo.

This massive layoff happened just a few months after the promotion of Matt Booty as the President of Xbox Studios and Game Content which manages studios such as Bethesda, ZeniMax, and Activision Blizzard. Sarah Bond who was previously the corporate Vice President was also promoted to President of Xbox, now responsible for overseeing the entire brand’s operations.

What Happens Next to the Affected Microsoft Employees?

In an internal memo, Matt Booty addresses the employees who have been impacted by this decision. He says:

“Those who are impacted are being informed in meetings starting today. Given the challenging day ahead, anyone who is set up to work from home and would prefer to, can work remotely today. Due to time zones and local holidays, some impacted employees in APAC and EMEA will be informed later this evening and into early next week. After the notifications are complete, leaders will bring their teams together. Please be mindful of this process in your conversations and outreach during these next few days.”

In a statement to IGN, the Communications Workers of America (CWA) mentioned that it will continue to support workers at Microsoft and across the game industry who want to have a union voice on the job. Furthermore, Senior QA Tester and a member of ZeniMax Workers United from CWA, Wayne Dayberry also added:

“Layoffs in the video game industry are becoming the norm, even at companies that continue to deliver huge profits. It hurts to see our coworkers, who are so passionate about this work, who actually make these video game companies so successful, be the first impacted by any cuts or layoffs at work. Companies will claim that we’re all a family, but a family doesn’t layoff or outsource people.”

What Does This Decision Mean for the Future of Games From Activision Blizzard?

Unfortunately, these layoffs have affected several teams responsible for development, shared services, and corporate functions within Blizzard Entertainment. As a result of this and the new agenda of Microsoft Gaming’s leadership team, they have decided to cancel the studio’s survival game dubbed Odyssey. Some of the developers who worked on this title will be transferred over to other projects that are in the early stages of production.

This work-in-progress title was long in development and Mike Ybarra even mentioned back in 2022 that they have doubled the team’s size so it certainly must’ve been a difficult decision to end its production. Apart from the cancellation of this survival game, no other changes to other Activision Blizzard titles have been announced as of yet.

This isn’t the first time Microsoft has announced massive job cuts as the corporation also decided to put 10,000 people out of jobs last January. Regrettably, the entire gaming industry appears to be significantly impacted by these layoffs, with a number of well-recognized studios and corporations including Google, Discord, Twitch, Unity, and Riot Games, all of which have also announced cuts.