Microsoft lays off 1,900 employees amid an ongoing restructuring

Microsoft, having completed its acquisition of gaming giant Activision Blizzard for $68.7 billion three months ago, recently announced a substantial workforce reduction within its gaming divisions. This move impacts approximately 1,900 employees, constituting around 8.6% of the 22,000 Microsoft employees working in the gaming sector. The restructuring also coincides with the departure of Blizzard president Mike Ybarra.

Microsoft makes sustainable cost structure moves

The layoffs are part of a comprehensive plan outlined by Microsoft Gaming CEO Phil Spencer, as detailed in an internal memo. Spencer’s memo outlines an “execution plan with a sustainable cost structure” that identified areas of redundancy following the acquisition. Microsoft has confirmed the authenticity of The Verge’s reported memo. Spencer’s memo emphasizes Microsoft’s commitment to supporting affected employees during the transition, stating, “We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws.”

The company underscores the importance of treating departing colleagues with respect and compassion during this challenging period. Ybarra, acknowledging the difficulty of the situation, expressed gratitude to the impacted individuals for their contributions. He stated, “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.” The gaming industry has faced a challenging start to the year, with several major companies implementing layoffs.

Impact on the gaming industry and union

Riot Games, the maker of League of Legends, laid off 530 employees, while game engine Unity let go of 1,800 people, representing 25% of its workforce. Discord and Twitch, owned by Amazon, also experienced significant layoffs, cutting 170 jobs (17%) and 500 jobs (35%) respectively. The situation has raised concerns within the gaming community, with a reported total of 5,600 gaming employees laid off in 2024, surpassing more than half of the total gaming layoffs from the previous year. Game developer and consultant Rami Ismail noted the broader impact, stating that even the tech industry at large has not been spared.

Companies like Google, Amazon, TikTok, and others also made cuts. Drawing from data on tech layoffs in 2023, it appears that January is a particularly challenging month for layoffs across various industries. In recent years, some departments within Microsoft and Activision have taken steps to form gaming unions. These unions, according to the Communications Workers of America, provide a platform for employees to negotiate over the impact of layoffs.

Although union-represented members at Zenimax, Raven, and Blizzard Albany are reportedly not affected by the recent cuts, the broader gaming community expresses sadness over the disruption in the lives of dedicated and talented video game workers. The current situation raises questions about the future of employment in the gaming and tech industries. The rise of unions in this space indicates a growing need for collective bargaining power to address the challenges associated with industry-wide layoffs. As the gaming landscape continues to evolve, the impact on workers and the role of unions in negotiating fair terms during periods of restructuring will likely remain in the spotlight.