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In its latest round of cuts, Microsoft has laid off around 650 people from its gaming division in mostly support and corporate roles, according to The Wall Street Journal.
In an internal memo to employees sent today, Xbox chief Phil Spencer said this was to “organize our business for long-term success.” He also mentioned that no games, experiences or devices would be canceled, and no studios would be closed.
In the same memo, Spencer said that there would be “some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games,” but didn’t elaborate on this.
He also touched on how Xbox was supporting affected employees, saying that impacted US staff members would receive “exit packages that include severance, extended healthcare, and outplacement services” to help with the transition.
Microsoft’s 2024 Staff Cuts Continue
This news comes just a few months after Microsoft laid off around 1,900 Activision Blizzard and Xbox employees and shuttered three game studios, including Arkane Austin, the developers of Redfall. In June of this year it laid off some of its Mixed Reality team.
Earlier, in January 2023, the company laid off almost 10,000 staff across all of its businesses, including Xbox employees. However, with its $68.7 billion acquisition of Activision Blizzard in October last year, it gained around 10,000 employees.
It’s true that the gaming industry has been hit hard recently, with a decline in sales following the pandemic and a slow rebound since then. But this news hits particularly hard given Microsoft’s recent artificial intelligence investments.
The Xbox giant recently funded OpenAI to the tune of $13 billion, with its spending over the three months to June 2024 reportedly reaching $19 billion, the same as it spent in an entire year in 2019, according to The Wall Street Journal.
