Microsoft Announces 650 More Layoffs in Gaming Division Following Activision Acquisition

Microsoft has announced another round of layoffs within its gaming division, with 650 employees set to lose their jobs. The news comes from an internal memo sent by Xbox chief Phil Spencer to staff on September 12, explaining that the decision primarily impacts corporate and support roles. These layoffs follow Microsoft’s massive $69 billion acquisition of Activision Blizzard in 2023 and mark the third wave of job cuts within the gaming division this year.

In his memo, Spencer emphasized that the layoffs were part of Microsoft’s effort to streamline its business for long-term success following the acquisition. He made it clear that no games, devices, or experiences were being canceled and that no studios would be closed as a result of these cuts. Instead, the focus is on restructuring support and corporate teams to better align resources with the company’s evolving needs.

Spencer’s memo to the team reads in full:

Phil Spencer’s Email to Staff:

“For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming — mostly corporate and supporting functions — to organize our business for long-term success.

I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the U.S., we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the U.S., packages will differ according to location.

With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices, or experiences are being canceled, and no studios are being closed as part of these adjustments today.

Throughout our team’s history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes, and we thank you for your compassion and respect for each other.”

-Phil

These layoffs follow two previous rounds of cuts that hit 1,900 employees earlier in the year, including the closure of studios such as Tango Gameworks, the developer of Hi-Fi Rush, and Arkane Austin, the team behind Redfall. While Tango Gameworks was later acquired by PUBG publisher Krafton, saving around 50 jobs, the layoffs have sparked concerns about the future stability of Microsoft’s gaming sector.

Despite the challenges, Spencer’s message underscored the company’s commitment to delivering high-quality gaming experiences. Microsoft has no plans to cancel any current projects, and it remains focused on supporting its studios while scaling resources to meet the demands of a rapidly evolving industry.

As the gaming industry continues to experience waves of layoffs and restructurings across major companies, Microsoft’s latest cuts serve as a reminder of the challenges that come with large-scale acquisitions. The company is positioning itself for what it hopes will be a more sustainable future, albeit with a leaner team.

For now, Microsoft’s gaming division continues to operate as planned, with products and services unaffected by the restructuring. Spencer’s email is a clear message that while the path ahead may be difficult, the focus remains on long-term success, delivering for players, and supporting the studios that power its games.