Microsoft announced it is laying off 650 employees within its Xbox unit, primarily affecting support staff, in an effort to cut costs and integrate its recent acquisition of Activision Blizzard.
Reasons for Layoffs
Microsoft has completed its acquisition of Activision Blizzard, which has led to significant layoffs within its Xbox division. According to Bloomberg, this is the third round of layoffs this year. In a memo sent to staff, Xbox CEO Phil Spencer noted that these cuts would mainly affect corporate and supporting functions.
Impact on Gaming Industry
The video game sector has faced soaring development costs and slowing growth this year. These factors have led to mass layoffs, studio shutdowns, and project cancellations. Companies like Sony, Take-Two Interactive Software, and Electronic Arts have also laid off staff and closed projects. In May, Xbox shut down several gaming studios, including Arkane Austin. However, this time, Phil Spencer stated that no games, devices, or studios would be canceled or closed as part of these layoffs.
Fan Reaction
The constant layoffs and studio closures have not gone down well with fans. Decisions to release some Xbox games on competitor consoles have also sparked questions about the brand's commitment to exclusive content. Research firm Newzoo recently revised its annual growth forecast for the video game market downward due to underperforming console sales.
Microsoft's layoffs in its Xbox unit reflect the challenging conditions in the current video game market. As companies adapt to new conditions, it remains to be seen what steps they will take moving forward.
Comments