Microsoft will lay off around 1,900 employees in its gaming unit, or around 9% of headcount, according to a Thursday memo obtained by CNBC.
Microsoft Gaming CEO Phil Spencer said that the layoffs were part of a larger “execution plan” that would reduce “areas of overlap,” a little more than three months after Microsoft closed on its acquisition of Activision Blizzard.
Former Blizzard President Mike Ybarra said Thursday on social media platform X, formerly Twitter, that he would be leaving Microsoft and Blizzard.
Blizzard co-founder Allen Adham, the unit’s design chief, is departing, and Blizzard will stop developing a new survival game, Matt Booty, head of Microsoft’s gaming studios, said in a memo. The Verge published Booty’s memo, which a Microsoft spokesperson said was authentic.
Spencer said Microsoft would provide “full support” including location-dependent severance to all employees.
Activision Blizzard is the publisher and developer of several massive gaming franchises, including Call of Duty and Diablo. Its mobile gaming subsidiary, King, is the developer behind Candy Crush Saga.
Microsoft shares were largely flat on the news, in part because layoffs are often expected after large mergers close. Microsoft’s $69 billion acquisition of Activision Blizzard was the company’s largest ever deal, more than double the size of its 2016 purchase of LinkedIn.
Tech investors have come to expect higher efficiency and a clearer road to growth or profitability as economic pressures mount.
Tech companies have made deep cuts just weeks into 2024, most of which were unrelated to mergers and acquisitions. The layoffs, at companies ranging from Tencent-owned Riot Games to TikTok to Discord, follow a dismal 2023 which saw more than 100,000 tech workers laid off.
Earlier this week, eBay said it would lay off 1,000 workers, while SAP said it would shift or buy out 8,000 employees.
Unlike the Microsoft layoffs, eBay and SAP saw a significant bump in their share prices after their announcements.
Read Spencer’s memo below:
It’s been a little over three months since the Activision, Blizzard, and King teams joined Microsoft. As we move forward in 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business. Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth.
As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1900 roles out of the 22,000 people on our team. The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible. The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax and the Xbox teams, and they should be proud of everything they’ve accomplished here. We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues. We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws. Those whose roles will be impacted will be notified, and we ask that you please treat your departing colleagues with the respect and compassion that is consistent with our values.
Looking ahead, we’ll continue to invest in areas that will grow our business and support our strategy of bringing more games to more players around the world. Although this is a difficult moment for our team, I’m as confident as ever in your ability to create and nurture the games, stories and worlds that bring players together.
Phil
— CNBC’s Steve Kovach and Jordan Novet contributed to this report.
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