Microsoft is once again trimming its workforce, this time laying off another 650 employees from its Xbox division. This decision follows the company’s earlier reduction of 1,900 jobs across various gaming divisions.
Phil Spencer on the Restructuring
Phil Spencer, CEO of Microsoft Gaming, sent out a company-wide memo on September 12, explaining the rationale behind the layoffs. He stated that the move is part of a broader effort to “organize our business for long-term success,” focusing primarily on corporate and support roles. Spencer also emphasized that this realignment is necessary to support Microsoft’s post-acquisition goals following the company’s $69 billion acquisition of Activision Blizzard last year.
“For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work,” Spencer wrote in the memo, according to Tech Radar. He added, “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.”
Support for Affected Employees
Spencer acknowledged that these layoffs are difficult, expressing deep gratitude for the contributions of those impacted. He assured that in the U.S., affected employees would receive severance packages, extended healthcare benefits, and outplacement services to help them transition to new roles. International employees will receive different support packages tailored to their respective locations.
Impact on Xbox Studios and Games
While this restructuring affects a significant number of employees, Spencer clarified that no studios will be closing, and no games, devices, or experiences are being canceled as part of this move. “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,” Spencer said.
Additionally, he explained that other teams would also be impacted as they adjust to shifting priorities and manage the lifecycle and performance of games. Still, Spencer reassured staff that the layoffs wouldn’t affect ongoing development projects or the future pipeline.
What Next?
“Today is a challenging day, and the changes will be hard,” Spencer wrote, acknowledging the emotional toll of the layoffs. “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.” Spencer also called for compassion and respect for those affected by the layoffs as the company navigates this transitional phase.
A History of Recent Layoffs
This latest round of layoffs comes on the heels of the 1,900 job cuts made earlier this year. Those reductions impacted teams across Xbox, Activision Blizzard, and ZeniMax as Microsoft worked to align its workforce for future growth opportunities. Notably, the closures included several Bethesda Softworks studios such as Hi-Fi Rush developer Tango Gameworks, Arkane Austin (the studio behind Redfall), Roundhouse Studios, and Alpha Dog Games. As part of these larger cuts, Microsoft has been focused on realigning itself in the gaming space post-acquisition. It is reported that while the company continues to streamline operations, it remains committed to long-term success in the gaming industry.
