Microsoft announces 1,900 dismissals following Activision Blizzard acquisition

Cuts extend across Activision Blizzard, Xbox and ZeniMax

Microsoft will cut approximately 1,900 jobs in its gaming division, just over three months after the completion of its monumental $69 billion acquisition of video game giant Activision Blizzard.

The job cuts equate to an 8% reduction in Microsoft's 22,000-person-strong gaming workforce, as revealed in an internal company memo obtained by The Verge.

The impact of the layoffs extends across teams within Activision Blizzard, Xbox and ZeniMax, all entities under Microsoft's gaming umbrella.

A previously announced - but untitled - survival game by Blizzard has also been confirmed as cancelled.

Microsoft Gaming CEO Phil Spencer addressed the workforce reductions in the internal memo, expressing a commitment to developing a strategy and execution plan with a sustainable cost structure to support the growth of the whole gaming business.

"The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible," he said.

"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."

Blizzard president Mike Ybarra, who ironically left Microsoft to join Blizzard, also announced his departure from the company on X, formerly Twitter.

"I want to thank everyone who is impacted today for their meaningful contributions to their teams, to Blizzard, and to players' lives," Ybarra said.

"To the Blizzard community: I also want to let you all know today is my last day at Blizzard."

Ybarra said the layoffs were not a reflection of the affected employees' contributions, calling his time leading Blizzard "an absolute honor."

Ybarra, who spent over 20 years at Microsoft, played a crucial role in overseeing the acquisition as Blizzard's president.

Microsoft plans to announce a new Blizzard president next week.

Allen Adham, Blizzard's chief design officer and one of Blizzard's co-founders, is also leaving.

The dismissals follow Microsoft's closure of a monumental $69 billion deal for Activision Blizzard a few months ago.

The acquisition aims to fortify Microsoft's presence in the video gaming market, leveraging best-selling titles like Call of Duty to enhance competitiveness against industry leader Sony.

The recent wave of layoffs is not exclusive to Microsoft. Other major players in the tech industry, including Alphabet, Google and Amazon, have also cut thousands of jobs this month, with the goal of cutting costs and raising profitability.

According to Layoffs.fyi, more than 21,000 workers have been dismissed from 76 tech firms in January alone, highlighting the ongoing trend of downsizing within the sector. However, this is well below the nearly 90,000 who lost their jobs in January 2023.

More than 260,000 tech job were cut in 2023, Layoffs.fyi says, marking the highest number across various industries. However, other reports - like this one from Challenger, Gray and Christmas - put the figure rather lower, at around 168,000. Microsoft itself contributed to this statistic with over 10,000 cuts last year.

Despite the widespread job cuts, analysts and industry experts anticipate a potential decrease in dismissals this year as the economic situation improves.

That said, firms racing to establish themselves in the evolving AI space might still find themselves more likely to downsize, to offset the investments they are making in AI.

Fatih Haltas, founder and CEO at Matchingham Games, told Computing the layoffs, in the wake of the Activision-Blizzard acquisition, were "predictable," but that the size of the dismissals was still surprising. They are also, he warned, "sadly just the latest in a wave of redundancies across the tech sector in reaction to the economic turbulence we've been experiencing. But I believe this is short term shock therapy.

"The nail in the coffin for the tech and IT sector in the UK isn't the layoffs, but the talent shortages that plague the industry. Tech firms, developers and design studios are consistently flagging the talent shortfall to the government, which has so far failed to react.

"In fact, the government exacerbated the situation with the recent changes to the requirements for a skilled worker visa. The tech and IT sector is one of the few areas left that the UK is genuinely globally competitive, but the current bout of layoffs indicates a rocky short-term future.

"In the face of these challenges, what the sector really needs is surgical government support. But this government seems incapable of recognising the importance of the tech and IT industries to the wider economy. In fact, it's just shut the door in the face of the overseas talent that the sector relies on."