Microsoft will lay off 1,900 staff across its gaming divisions, impacting employees at Activision Blizzard and Xbox.

The cuts, reported by The Verge, amount to around 8% of Microsoft’s total gaming workforce of 22,000.

In an internal memo on Thursday (Jan.25), Microsoft Gaming CEO Phil Spencer called the layoffs “painful” but necessary to “align on a strategy and execution plan with a sustainable cost structure.”

Most of the eliminated roles were at Activision Blizzard, which Microsoft acquired in a huge $68.7 billion deal last October. However, some positions at Xbox and ZeniMax studios were also cut.

Alongside the broad layoffs, Blizzard President Mike Ybarra announced his departure after overseeing the merger. Blizzard’s in-development survival game was also canceled, with staff being shifted to other early-stage projects. Ybarra took to X and in a lengthy post said his “heart is with each” of those who have been affected.

The gaming cuts come amid a wave of tech industry layoffs as companies brace for potential economic slowdowns. Just this month, Riot Games, Google, Discord, Twitch, Unity, eBay, and others have announced staff reductions.

For Microsoft specifically, Thursday’s news follows a round of 10,000 layoffs across the company last year. Next week, the tech giant will report its first earnings since closing the Activision deal, offering Wall Street its first glimpse into the merger’s impact. Despite the turmoil, the tech giant remains confident in its gaming strategy, according to Spencer, with plans to “bring more games to more players around the world.”

This week Microsoft surpassed the $3 trillion market cap milestone thanks to its leading position in consumer artificial intelligence (AI). It is on track to overtake Apple and become the planet’s most valuable company.

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Sam Shedden

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Sam Shedden is an experienced journalist and editor with over a decade of experience in online news. A seasoned technology writer and content strategist, he has contributed to many UK regional and national publications including The Scotsman, inews.co.uk, nationalworld.com, Edinburgh Evening News, The Daily Record and more. Sam has written and edited content for audiences whose interests include media, technology, AI, start-ups and innovation. He's also produced and set-up email newsletters in numerous specialist topics in previous roles and his work on newsletters saw him nominated as Newsletter Hero Of The Year at the UK's Publisher Newsletter Awards 2023. He has worked in roles focused on growing reader revenue and loyalty at one of the UK's leading news publishers, National World plc growing quality, profitable news sites. He has given industry talks and presentations sharing his experience growing digital audiences to international audiences. Now a Managing Editor at Readwrite.com, Sam is involved in all aspects of the site's news operation including commissioning, fact-checking, editing and content planning.