Microsoft lays off 8% of gaming staff

JOIN THE CLUB The logo of Microsoft is seen on the opening day of the Integrated Systems Europe exhibition in Barcelona, Spain, on Jan. 31, 2023. Microsoft on Wednesday, Jan. 24, 2024, has joined the $3-trillion club on the back of investing in artificial intelligence. AFP PHOTO

SAN FRANCISCO, California: Microsoft is laying off 1,900 people, or 8 percent of staff, from its gaming division as it consolidates the blockbuster buyout of “Call of Duty” maker Activision Blizzard.

The head of Microsoft’s gaming division, Phil Spencer, said in a memo to employees that the cuts came after synergies were found between the two companies, the company confirmed.

Spencer told employees that Microsoft and Activision were committed to finding a “sustainable cost structure” to grow the gaming business, which employs 22,000 people and includes the Xbox division.

“Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth,” he added.

The existence of the memo was first reported by tech news website The Verge.

Alongside the layoffs, Blizzard president Mike Ybarra said he was leaving the company.

“It’s an incredibly hard day, and my energy and support will be focused on all those amazing individuals impacted,” Ybarra said on X, formerly Twitter.

Microsoft launched its blockbuster takeover in January 2022, an acquisition that made it the world’s third-largest gaming company by revenue.

The buyout faced stiff scrutiny from regulators, including in the United States, but the transaction eventually prevailed.

Britain’s regulator originally blocked the deal over fears it would damage competition in the fast-growing cloud gaming sector, where games are bought virtually and players can use a variety of devices rather than just consoles.

The layoffs come amid an unprecedented wave of staff cuts at Big Tech companies that began in late 2022, but have rolled on through early 2024.

“Layoffs in the video game industry are becoming the norm, even at companies that continue to deliver huge profits,” said Wayne Dayberry, a member of the union representing workers at ZeniMax Studios, owned by Microsoft.

“It’s clear that one way or the other, the only way forward is for all of us to come together as workers to protect each other,” Dayberry added in a statement released by the Communications Workers of America union whose members include gaming division workers at Microsoft subsidiaries.