Microsoft slashes 1,900 jobs across Xbox and Activision Blizzard

We're not even one month into 2024 and it's already been another brutal year for workers in the video game industry. Microsoft is the latest company to announce a major round of layoffs in its gaming division as it's cutting around 1,900 workers from its Xbox, Activision Blizzard and ZeniMax (aka Bethesda) teams. That brings the total number of video game layoffs this year to around 6,000 already. There were around 9,000 layoffs in the industry in all of 2023, according to some estimates.

"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," Microsoft Gaming CEO Phil Spencer told employees in a memo obtained by The Verge. "As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1,900 roles out of the 22,000 people on our team."

The majority of the cuts are said to be within Activision Blizzard, three months after Microsoft finally closed its $68.7 billion takeover of the publisher. Some positions on the Xbox and ZeniMax teams will be affected too. The cuts equate to around eight percent of Microsoft's gaming division.

"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," Spencer wrote. "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."

Spencer added that Microsoft will "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."

Xbox confirmed to Engadget that Spencer sent this memo to Microsoft employees on Thursday morning.

Among those leaving the company is Blizzard president Mike Ybarra, who is exiting of his own accord. "I want to thank everyone who is impacted today for their meaningful contributions to their teams, to Blizzard, and to players’ lives. It’s an incredibly hard day and my energy and support will be focused on all those amazing individuals impacted — this is in no way a reflection on your amazing work," Ybarra wrote on X.

"To the Blizzard community: I also want to let you all know today is my last day at Blizzard. Leading Blizzard through an incredible time and being part of the team, shaping it for the future ahead, was an absolute honor," Ybarra continued. "Having already spent 20+ years at Microsoft and with the acquisition of Activision Blizzard behind us, it’s time for me to (once again) become Blizzard’s biggest fan from the outside." Microsoft’s game content and studios president Matt Booty told staff that the company plans to appoint a new Blizzard president next week.

The layoffs included most of those remaining in Activision Blizzard's esports organization, according to reports. The publisher previously let go around 50 esports staffers last summer ahead of a reorganization of the Overwatch competitive circuit — Blizzard has outsourced operations of the new Overwatch Champions Series to ESL FACEIT Group. This round of layoffs included Call of Duty League and Overwatch League broadcast staff, onscreen talent and observers (folks who keep an eye on the action to make sure the broadcast team is catching the biggest plays).

“Our esports business is not going away, but we’re being thoughtful about how to evolve to better deliver for our players and fans. With a continued commitment to competitive esports, we have landed on a model that more closely aligns with our game franchises," Activision Blizzard told GamesBeat. "We’re not stopping esports, instead, we are adapting to a new business model to better serve the community. The people who are directly impacted have all played an important role in the success of our team, and the success of Activision Blizzard. We are grateful for their contributions, and we will provide our full support with severance, equity, bonus, healthcare, and job support.”

One other major consequence of this reorganization, according to The Verge, is that Blizzard's survival game, codenamed Odyssey, has been cancelled. That would have marked Blizzard's entry into a new genre, but it did not reveal any other details about the project since announcing it two years ago. Some of the developers who were working on the survival game are being moved over to "one of several promising new projects Blizzard has in the early stages of development," Booty wrote.

According to Bloomberg reporter Jason Schreier, Odyssey had been in the works for six years. Partway through development, Blizzard execs reportedly told the team to switch from making the game in Unreal Engine to an in-house engine called Synapse. However, the tech was taking too long to come together. Despite positive feedback for early versions of the game, it was going to take several more years before Odyssey would be finished. In the end, Activision Blizzard canceled the game after reportedly determining that Synapse was not ready for prime time.

Layoffs are commonplace following major mergers, especially once higher-ups pinpoint areas of overlap. Oftentimes, that's seen in positions on the corporate side, such as marketing and human resources.

This is the largest single slate of layoffs in the gaming industry so far this year, outstripping the 1,800 workers that Unity is letting go. Twitch and Discord are also laying off hundreds of people each. This week, Riot Games said it was reducing its headcount by around 530 people. Dead by Daylight studio Behaviour Interactive, Tiny Tina's Wonderland developer Lost Boys Interactive and Outriders maker People Can Fly are also among the many gaming companies to have conducted layoffs so far in 2024.

The Communications Workers of America (CWA) told Engadget in a statement that none of its members were hit by the layoffs. The union represents hundreds of people across Microsoft's gaming division, including around 300 quality assurance workers at ZeniMax and others at the likes of Raven Software.

Last June, as it was trying to appease regulators and close its purchase of Activision Blizzard, Microsoft pledged to adopt a neutral stance when employees covered by an agreement with the CWA express interest in joining a union. In turn, the CWA backed the planned merger.

Update 1/25 3:59PM ET: Added more details regarding the cancellation of Odyssey from Bloomberg's report.

Update 1/26 1:20PM ET: Added confirmation from the CWA that none of its members were laid off.

Update 1/30 3:14PM ET: Added details about layoffs in Activision Blizzard's esports division.