Microsoft Gaming Lays Off 650 Employees in Latest Cost-Cutting Measure
Microsoft Gaming is laying off 650 employees, or around 3% of the company's workforce, in its second major layoff in 2024. In an email from Microsoft Gaming CEO Phile Spencer to employees, it was announced that most of the affected roles would be from "corporate and supporting functions."
Earlier in 2024, Microsoft Gaming laid off over 1900 employees in a drastic cost-cutting measure, its first following the company's acquisition of Activision-Blizzard. At the time, the layoffs hit various executive roles in the company.
Those affected by the decision in the US will be supported with "exit packages that include severance, extended healthcare, and outplacement services" while those stationed outside will also be supported with packages that comply with local employment laws.
Microsoft has been in hot waters for the majority of the year. After bringing some of its well-regarded Xbox exclusives to PlayStation, the company shut down four major studios it acquired from its acquisition of Bethesda. Thankfully one of the affected studios, Tango Gameworks, was acquired by Krafton who rehired most of its staff.
"In the end, I've said over and over, I have to run a sustainable business inside the company and grow, and that means sometimes I have to make hard decisions that frankly are not decisions I love, but decisions that somebody needs to go make," said Spencer when he addressed the layoffs from January in an interview with IGN.
Follwing the mass layoff of 2023, this year has seen its fair share of woes, with employees being eliminated at Bungie, and even Nintendo of America laying off over 100 QA testers. For Microsoft, the condition is worsened by declining sales of the Xbox hardware, with the company also increasing the price of Xbox Game Pass, which the FTC is calling a "degraded product."
The full email, as retrieved by Stephen Totilo, can be read below:
Subject: Changes to Microsoft Gaming
For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming—mostly corporate and supporting functions—to organize our business for long term success. I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US packages will differ according to location. With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today. Throughout our team’s history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.
Phil
