Microsoft Cuts 1,900 Jobs in Its Video Game Division


Microsoft said Thursday that it would eliminate 1,900 roles in its video game division, including at Activision Blizzard, which it acquired for $69 billion three months ago.

The job cuts will be made at Activision Blizzard, the maker of hit games like Call of Duty and Guitar Hero, as well as Xbox, according to a staff memo from Phil Spencer, the head of Microsoft Gaming, that was obtained by The New York Times.

The cuts amount to a reduction of nearly 9 percent of Microsoft’s 22,000-person video game division, but less than 1 percent of the company’s roughly 220,000 employees overall.

“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,” Mr. Spencer said in the memo.

This month, thousands of employees across the video game industry have been told they are facing layoffs, as the pandemic boom in playing continues to recede.

Riot Games, which makes League of Legends, said it would lay off about 11 percent of its work force. Twitch, a video streaming platform owned by Amazon that is used heavily by gamers, announced that it would cut 35 percent of its staff. Discord, a social platform beloved by gamers, is cutting 18 percent of its ranks. And Unity Software, which provides software for game developers, said it was cutting a quarter of its staff, or roughly 1,800 jobs. They all had layoffs last year as well.

Piers Harding-Rolls, a gaming researcher at the analytics firm Ampere Analysis, said some trims at Activision Blizzard were expected after the acquisition, but the extent of the industry cuts was “unprecedented.”

“I’ve been really surprised by the scale and extent in terms of the number of companies that have laid people off in the new year,” he said. “It seems like a lot of companies waited for the end of the year and pulled the trigger in January.”

At Microsoft, gaming has become the company’s most important consumer business, surpassing $15 billion in annual sales, largely under the Xbox brand. The company’s ambitions became clear two years ago, when it announced the blockbuster deal to acquire Activision, whose valuation had fallen over concerns about its workplace culture, which the company denied.

The deal faced intense regulatory scrutiny around the world, and the company had to delay the closing date to October, from last summer. In the meantime, as the world reopened after the pandemic retreated, consumers started going out again instead of staying in and playing. Microsoft’s gaming revenue fell $764 million, or 5 percent, in its last fiscal year, which ended June 30.

Bobby Kotick, who led Activision Blizzard since 2008 and built it into a powerhouse, left the company at the end of last year. The president of Blizzard Entertainment, Mike Ybarra, announced on the social media platform X that Thursday would be his last day at the company.

“Having already spent 20+ years at Microsoft and with the acquisition of Activision Blizzard behind us, it’s time for me to (once again) become Blizzard’s biggest fan from the outside,” Mr. Ybarra wrote.

The layoffs were reported earlier by The Verge. Microsoft declined to comment.

The video game industry is “suffering through a winter right now,” said Joost van Dreunen, a New York University professor who studies the gaming business.

This year is expected to be slower for the industry than 2023, which had a series of blockbuster releases like The Legend of Zelda: Tears of the Kingdom and a remake of Resident Evil 4.

In the meantime, companies are shedding workers and cutting costs to stay competitive. “If everybody around you is cutting their overhead and you don’t, you’re going to invoke the wrath of your shareholders at some point,” Mr. van Dreunen said.