What you need to know
- Xbox formed a new org dubbed “Microsoft Gaming” a while back after acquiring Bethesda / Zenimax and Activision-Blizzard-King to incorporate all of its gaming functions.
- In an email shared with Windows Central this morning, Microsoft Gaming CEO Phil Spencer announced a new round of layoffs, primarily targeting corporate functions like HR, finance, and marketing.
- Spencer emphasized that no devices are being cancelled and no studios are being closed as a result of the layoffs.
- The email Phil Spencer sent to staff can be read in full below.
As a long-time gaming enthusiast and follower of the industry, I find myself both intrigued and disheartened by the latest news from Microsoft Gaming. Having witnessed the rapid expansion of this company through years of acquisitions, it’s surprising to see another round of layoffs, especially after the significant reduction earlier this year.
Once more, Microsoft is implementing job cuts within its gaming division, coming after the significant reduction of around 1,900 employees earlier this year.
This morning, an email from Microsoft Gaming CEO Phil Spencer was shared with Windows Central. In this communication, he announced that approximately 650 employees would be let go from various sectors of the company, including ZeniMax Media (creators of Fallout and Elder Scrolls), Activision (home to Call of Duty), Blizzard Entertainment (known for Diablo and World of Warcraft), and Xbox Game Studios (responsible for Forza, Halo, among others).
In the email which can be read further below, Spencer emphasized that no studios are being closed and no devices are being cancelled. Spencer elaborated that the redundancies will fall “mostly” in corporate teams and their supporting functions, namely things like HR, finance, and marketing.
The full email is as follows.
Over the last year, we’ve aimed at minimizing disruptions as we brought in new teams and helped them perform optimally. In line with streamlining our organization after the acquisition and managing our operations effectively, we have chosen to reduce around 650 positions within Microsoft Gaming, primarily focusing on corporate and support roles. This restructuring is intended to set our business up 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.
By implementing these modifications, our corporate and auxiliary teams and assets will be coordinated for long-term growth, enabling them to assist our studio teams and business sectors more effectively with scalable programs and resources. Additionally, in the course of managing our operations, there are some effects on other teams as they adjust to new priorities and handle the maturity and efficiency of games. Rest assured, no games, devices, or experiences are being discontinued, and no studios are being shut down during these changes at this time.
Over the course of our team’s journey, we’ve experienced triumphs and tribulations. Today is certainly a day that falls into the latter category. I understand that enduring further alterations can be tough, but history has shown us that even in the toughest situations, this team has been capable of supporting one another with empathy and kindness while striving to keep providing for our players. We value your backing as we confront these challenges and express our gratitude for your understanding and respect towards every member of our team.
Phil”
Microsoft Gaming has become a vast organization within Microsoft, following years of acquisitions in efforts to boost its global footprint. Xbox hardware continues to decline year-over-year, but as a division, Xbox is making more money than ever, primarily on the basis of service titles like Fallout 76, Diablo 4, World of Warcraft, and the juggernaut that is Call of Duty. When you remove Activision-Blizzard from the equation, though, Microsoft would be projecting an overall decline for its gaming division based on its FY24 Q4 statements.
More layoffs from Microsoft Gaming
Given Microsoft has a number of potentially highly profitable ventures on the horizon such as the Starfield: Shattered Space DLC, Call of Duty Black Ops 6, and an expansion for Diablo 4 titled Vessel of Hatred, it seems unlikely that Xbox is currently facing financial difficulties. However, it’s possible that they are generating even more revenue than one might initially think.
In simple terms, if Microsoft proceeds with more layoffs, it could strengthen the case made by the U.S. trade regulator FTC that buying Activision Blizzard was not a good idea. The FTC is still challenging Microsoft in court over its acquisition of Activision Blizzard last year, a deal which cost Microsoft a staggering $72 billion in cold cash.
Over the last few years, the video game industry has experienced a significant number of job cuts due to changing user habits following the pandemic. Analysts like Newzoo have reported decreased playtime hours and spending, leading publishers to decrease their workforce back to pre-boom levels, which were driven by mandatory lockdowns. Microsoft’s plan to streamline its corporate functions, such as HR, finance, and marketing, will likely centralize the company at locations like Microsoft UK in London and its main campus in Redmond, Washington.
Microsoft is rumored to be developing the next iteration of its Xbox gaming console hardware, which seems to have avoided the latest round of job cuts. Besides working on numerous Xbox games, Microsoft has been criticized for making some of their previous exclusives available on PlayStation, a move designed to increase profit margins. Recently, Microsoft has also increased the price of Xbox Game Pass, despite enjoying significant company profits.
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2024-09-12 15:09