Microsoft Cuts 1,900 Xbox and Activision Staff Amid Gaming Industry Crisis

Despite being less than a month into 2024, thousands of video game industry workers have already lost their jobs. Now Microsoft is joining the depressing trend as it plans to lay off 1,900 employees across Activision Blizzard and Xbox this week—despite just becoming the second company ever to hit a $3 trillion valuation.

Most of the layoffs, which make up about 8% of Microsoft’s gaming division of 22,000 employees on the whole, will occur within its Activision Blizzard division—which the tech giant finally acquired for $69 billion after a lengthy regulatory battle three months ago.

Blizzard’s upcoming survival game has now been reportedly canceled, and Blizzard President Mike Ybarra and Chief Design Officer Allen Adham are among the executives leaving the company.

But Blizzard apparently still has other games in development, and those remaining who were assigned to the now-dead game will be moved to other departments.

In an internal memo, Xbox head Phil Spencer stated that Microsoft will provide the laid-off employees with severance and other benefits depending on “local employment laws.” The company plans to “continue to invest in areas that will grow our business,” but did not specifically state what some of those areas might be.

It’s worth noting, though, that Xbox did recently invest in an AI-powered game development toolkit late last year, which video game talent heavily criticized over fears that such tools would lead to layoffs and poorer-quality games. Microsoft’s AI gaming push has also been heavily criticized by gamers themselves. And Blizzard is reportedly experimenting with AI to design future game characters.

National union group Communications Workers of America, which represents game workers at some of Microsoft’s subsidiaries, called the layoffs a clear sign that “even when you work at a successful company in an extremely profitable industry, your livelihood is not protected without a voice on the job,” Reuters reported. 

“We will continue to support workers at Microsoft and across the video game industry who want to have a union voice on the job,” the CWA added.

“Layoffs in the video game industry are becoming the norm, even at companies that continue to deliver huge profits,” ZeniMax CWA member Wayne Dayberry told IGN.

While it’s unclear exactly to what extent Microsoft’s love for AI led to its latest round of layoffs, the rise of generative AI tools has undoubtedly led to growing concerns around the onslaught of layoffs in 2023. It’s difficult to prove causation in many cases, but the correlation has proven disturbing to many industry workers.

Riot Games, another large gaming studio, also laid off 530 employees this week, though it has promised its departing staffers benefits like six months of severance pay to lessen the wound.

Twitch, Unity, Discord, and Nexon’s Pixelberry Studios are among the growing number of gaming-related firms that have also cut staff this month. According to Kotaku, nearly 6,000 game industry workers have already lost their jobs in less than a month this year.

Edited by Andrew Hayward