Microsoft lays off 1,900 employees across its gaming division just a day after reaching $3 trillion valuation

Microsoft said Thursday it plans to lay off 1,900 employees across its gaming divisions, including Xbox and Activision Blizzard, which the tech giant acquired last year for a whopping $69 billion, The Verge reported.

The news comes just a day after the Redmond-based tech giant hit the $3 trillion market valuation milestone. The job cuts, which amount to about 8% of Microsoft’s Gaming division, are expected to predominantly affect Activision Blizzard, as outlined in an internal memo from Phil Spencer, the head of Microsoft’s gaming division. Despite numerous inquiries, Microsoft has yet to provide a comment to Reuters regarding these layoffs.

Moreover, in addition to the workforce reduction, Blizzard President Mike Ybarra and Chief Design Officer Allen Adham are departing from the company. Furthermore, a survival game that was previously in development at Blizzard has been scrapped.

These developments occur within a broader context of Microsoft’s strategic moves in the gaming industry. The acquisition of Activision Blizzard significantly bolstered Microsoft’s presence in the video game market, positioning it to compete more effectively with industry leader Sony, particularly with blockbuster titles like “Call of Duty” under its belt.

According to reports from Bloomberg, Phil Spencer communicated to Microsoft staff via email that the layoffs constitute around 8% of the company’s 22,000 gaming employees. This restructuring aligns with similar actions taken by other gaming companies, including Riot Games, which have also implemented sizable workforce reductions.

“Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth,” Spencer wrote.

In an email reviewed by Bloomberg, Rob Kostich, Activision Publishing chief, explained that these cuts were necessary “to reset and re-align our resources for the future,” echoing the sentiment expressed by Phil Spencer in his email to Microsoft employees.

The recent layoffs also reflect ongoing transformations within the gaming industry, which experienced significant hiring during the pandemic, with big players like Amazon and Google leading the way.

Activision Blizzard, renowned for iconic titles like Call of Duty, World of Warcraft, and Diablo, has faced speculation regarding Microsoft’s intentions following the acquisition, with some suggesting that substantial layoffs were inevitable.

According to the layoff tracking website Layoffs.fyi, 72 tech companies have laid off a total of 13,240 employees so far this year. eBay is not alone. Tech giants including Google, Amazon, Discord, and Unity Software have already announced layoffs.