Microsoft is laying off 1,900 employees in its gaming unit as part of a bid to reduce “areas of overlap”, leaving hundreds out of a job while multiple C-suite employees announce their departure.

Only three months after closing a historic US$68.7 billion acquisition of video game publisher Activision Blizzard, Microsoft Gaming’s chief executive Phil Spencer sent out an internal memo confirming colossal layoffs for its gaming division.

As reported by The Verge, the memo details around 1,900 roles will be cut – constituting approximately eight per cent of the gaming division’s 22,000-strong workforce.

Spencer attributed the layoffs to a strategy and “execution plan” aimed at achieving a sustainable cost structure and reducing “areas of overlap”.

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

“As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1,900 roles out of the 22,000 people on our team.

“The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible.”

While the layoffs impact employees across Microsoft Gaming, those under Activision Blizzard and fellow publishers Xbox and Zenimax are most impacted.

“The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax and the Xbox teams, and they should be proud of everything they’ve accomplished here,” wrote Spencer.

“We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws.”

The memo notes Microsoft – which recently became the second company ever to top $4.54 trillion (US$3 trillion) valuation – will continue to invest in the company’s growth and its strategy to bring “more games to more players around the world”.

Layoffs followed by resignations

Following the layoffs, Blizzard president Mike Ybarra has decided to leave Microsoft after more than 20 years with the company.

“Having already spent 20+ years at Microsoft and with the acquisition of Activision Blizzard behind us, it’s time for me to – once again – become Blizzard’s biggest fan from the outside,” said Ybarra.

While Microsoft plans to name a new Blizzard president this week, Blizzard’s chief design officer and Blizzard cofounder Allen Adham also announced he will be leaving the company.

The changes also see one of Blizzard’s long-awaited survival games cancelled, with Microsoft’s game content and studios president, Matt Booty, revealing the company will shift some of the staff working on it to “one of several promising new projects Blizzard has in the early stages of development.”

Backlash as industry cuts climb

Microsoft’s decision makes it the latest company to announce sudden cuts in the gaming industry this year – with streaming service Twitch, messaging platform Discord and publisher Riot Games already having laid off thousands this January.

On social media platform X (formerly Twitter), game developer Rami Ismail pointed out industry layoffs for January 2024 are already at more than half of those for all of 2023 – at 5,600 and 10,500 layoffs respectively.

Meanwhile, Jorge Murillo – who was affected by the layoffs – said lead team members and managers were left in the dark on the sudden cuts.

“Just got laid off with basically my entire team. Can't really process it atm,” said Murillo.

“Someone just looked at a spreadsheet, decided which parts of the projects they wanted and cut the rest. No attempts to keep people, no communication, just – thanks for nothing! Bye!”

“To be clear leads and managers didn't seem to know this this was coming.”

Countless social media users are pinning the widespread layoffs to mismanagement, while community members are collaborating to share job resources and career preparation for those affected.