Microsoft cuts major team that develops popular products

Microsoft (MSFT) has made a major change in its workforce, which involves significantly reducing a vital team through redundancies.

In a new memo to employees, which was obtained by IGN, Microsoft Gaming CEO Phil Spencer informed staff that the company will lay off 650 Xbox employees.

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“As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles in Microsoft Gaming – primarily corporate and support functions – to set up our business for long-term success ,” Spencer said in the note.

The job cuts come after Microsoft completed its acquisition of video game company Activision Blizzard in October 2023, after first announcing it in 2022.

Spencer also clarified in the note that the layoffs will not cancel any “games, devices or experiences” and that the studio will remain open. However, the change will affect other teams.

“As part of running the business, there are some impacts on other teams as they adapt to changing priorities and manage the lifecycle and performance of games,” Spencer said.

Phil Spencer, executive vice president of Xbox Business for Microsoft Corp., speaks during the company’s Xbox One X reveal event ahead of the E3 Electronic Entertainment Expo in Los Angeles, California, U.S., Sunday, June 11, 2017.

Bloomberg/Getty Images

This current round of layoffs at Microsoft’s gaming division follows the January layoffs of 1,900 Activision Blizzard and Xbox employees.

The change also comes after Microsoft revealed in its fourth-quarter 2024 earnings report that its revenue from Xbox content and services rose 61 percent year-over-year, largely due to its acquisition of Activision Blizzard.

However, during an earnings call on July 30 that discussed the earnings report, Microsoft revealed that its Xbox hardware revenue fell about 42% during the quarter and that it expects continued declines for the year per year.

Gambling industry employees face mass layoffs

Over the past year and a half, mass layoffs have hit the gaming industry. According to recent data from Statista, approximately 11,250 gaming workers worldwide will lose their jobs due to layoffs in 2023.

The trend won’t end anytime soon, as in the first six months of 2024, 11,000 gaming workers lost their jobs.

These layoffs were widely criticized on social media, where many people blamed the job cuts on “corporate greed.”

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Former Sony Computer Entertainment Europe president Chris Deering recently dismissed this criticism during a recent interview with the My Perfect Console with Simon Parkin podcast.

“I don’t think it’s fair to say the resulting layoffs were greed,” Deering said

He also argued that those who have been laid off in the gaming industry should “figure out how to get through it” and that having a skill in game development does not mean a lifetime of “poverty or limitation “.

“I guess people got paid some sort of decent severance package and by the time it’s over … Well, you know, that’s life,” Deering said.

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