The Impact of Microsoft’s Massive Layoffs in the Gaming Division
In a recent turn of events, Microsoft has made the decision to lay off 1,900 employees from its gaming division, with the majority of those affected being from the recently acquired Activision Blizzard, according to an internal memo obtained by The Verge.
The layoffs have also affected some employees from Xbox and ZeniMax. The timing of these job cuts comes roughly three months after the completion of Microsoft’s acquisition of Activision Blizzard for a staggering $69 billion.
Microsoft Gaming CEO, Phil Spencer, initially welcomed Activision, Blizzard, and King employees to the company in an email on October 13th, stating, “Today is a great day for gaming.” Unfortunately, the state of affairs has changed, as Microsoft’s gaming division is now losing over 8% of its 22,000-strong workforce. In a less enthusiastic memo sent on Thursday morning, Spencer detailed the “painful decision to reduce the number of positions in our gaming division by approximately 1,900.”
The acquisition of Activision Blizzard brought some of the world’s biggest game franchises into Microsoft’s portfolio, including Call of Duty, World of Warcraft, Diablo, and Candy Crush, to name a few. The deal faced antitrust challenges from the Federal Trade Commission and the UK Competition and Markets Authority, both fearing that Microsoft would stifle competition. However, the deal was ultimately approved. While Activision Blizzard games have yet to be added to Microsoft’s game subscription service, Xbox Game Pass, that may change in the year 2024.
During the layoffs, Blizzard President, Mike Ybarra, announced his resignation via a tweet on Thursday morning, as did Blizzard co-founder and chief design officer, Allen Adham, according to information from The Verge. The upcoming survival game from Blizzard, which was meant to be the studio’s first new IP since Overwatch in 2016, has also been canceled.
The chain of acquisitions and layoffs unfortunately follows a familiar pattern in the game development industry. In September, Epic Games laid off numerous developers from Media Tonic, the studio behind the game Fall Guys, which was acquired in 2021. In May, Embracer shut down Volition, the studio behind the Saints Row game, after completing 20 acquisition transactions in the previous year. The situation was inevitable for Activision Blizzard.
Yet, before the deal was approved, representatives from Microsoft and Activision Blizzard were touting the potential benefits of the acquisition. In 2022, Microsoft President, Brad Smith, stated that the deal would “create more opportunities for players and game developers.” In April 2023, Activision CEO, Bobby Kotick, claimed that blocking the deal would actually “stifle investment, competition, and job creation” in the gaming industry.
Regulators were primarily focused on how the Activision Blizzard deal could stifle the computer gaming ecosystem, and today we are witnessing the materialization of those antitrust concerns for game developers. Nearly 2,000 game developers have lost their jobs today, and the computer gaming industry has already laid off over 5,800 developers in this year alone, just under a month into 2024.
On Wednesday, Microsoft became the second company in history to achieve a $3 trillion market value, right behind Apple. What a perfect way to celebrate being one of the wealthiest companies in history.
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The source of the article is from the blog macholevante.com