Xbox chief Phil Spencer sent out an email to employees this morning with the subject line “Changes to Microsoft Gaming.” The software giant, which spent the past decade spending billions of dollars acquiring video game studios, was laying off 650 people in its gaming division.
Stephen Totilo at the Game File published a copy of the email. Spencer said the move was “part of aligning our post-acquisition team structure and managing our business” after its many recent mergers and acquisitions. To hear him tell it, the people who lost their jobs were “mostly corporate and supporting functions.”
Spencer shared words of sympathy and regret in the email where he terminated the jobs of more than 500 people. “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,” he said.
The move would not, Spencer said, end any current projects. “No games, devices or experiences are being canceled and no studios are being closed as part of these adjustments today.”
Microsoft attempted to buy its way to a victory this console generation and it hasn’t been going well. The Xbox Series X and Series S consoles aren’t selling as well as the Playstation 5 or Nintendo Switch. Game Pass—a Netflix-style subscription service for video games—has fully entered its enshittification era. In July, Microsoft announced it was raising prices for the service across the board.
Xbox gobbled up a lot of game companies in the past decade, including Skyrim studio Bethesda and indie darling Double Fine Productions. But its purchase of Activision-Blizzard, which it finalized late last year, was so massive that it caught the eyes of regulators in the U.S. and Europe. The company cost $69 billion and Microsoft spent months in courtrooms across the world hammering out the fine details of the arrangement.
Activision-Blizzard’s portfolio is impressive. It’s the studio behind Call of Duty, World of Warcraft, Diablo, and Candy Crush. This is a company that practically prints money. But the sudden influx of old Call of Dutys on Game Pass isn’t thrilling gamers or selling consoles.
This is the second big round of cuts Microsoft has made to its gaming division since acquiring Activision-Blizzard. At the end of January, three months after it closed the deal and a few days after it received a $3 trillion valuation, Microsoft cut 1,900 gaming jobs. It was 8% of the division’s total workforce at the time. The move pissed off the Federal Trade Commission who said the layoffs violated promises Microsoft made when the FTC investigated the acquisition.
