Xbox lays off 650 more staff as total cuts pass 2,500 since buying Activision Blizzard

It happened again (Microsoft)

Microsoft has laid off hundreds more staff from its Xbox division, with exec Phil Spencer admitting to another ‘challenging day’.

Although the constant stream of layoffs and shutdowns has decreased in frequency in recent months, compared to the start of the year, the crisis in Western video games continues, and is likely to do so far at least the next 12 months.

Almost every Western publisher has cut staff over the last year, often hundreds at a time, and usually despite still making enormous profits – just not quite as much as they’d like.

Microsoft became a trillion dollar company this year, and spent $75.4 billion buying Activision Blizzard, but so far they’ve laid off 2,550 of the staff they took on, with 1,900 laid off in January and another 650 losing their jobs this week.

There are multiple reasons why Xbox is laying off so many people, beyond the general industry trend of trying to cut back after hiring too many people during the pandemic (when publishers pretended to investors that the boost in sales from everyone being on lockdown would somehow continue indefinitely).

The first problem is that acquisitions always lead to layoffs, since it ends up with multiple people who are now doing the same job. The larger the acquisition the more job duplication, and Activision Blizzard was the biggest in both Microsoft’s and the games industry’s history.

There’re also the very obvious problems at Xbox itself, with declining console sales and lower than expected uptake on Games Pass. Although Microsoft has never talked about it candidly, Xbox’s move towards more multiformat releases is clearly a result of this – with the increasing cost of making games making it all but impossible to reach a profit on just Xbox and PC.

An email announcing the job losses was sent to all Microsoft Gaming staff by Xbox boss Phil Spencer and obtained by IGN.

As you might imagine, it includes the usual faint platitudes and vague explanations, with Spencer claiming he’s been trying to ‘minimise disruption while welcoming new teams and enabling them to do their best work.’

According to Spencer most of the job losses are in ‘corporate and supporting functions’ although he implies some developers will be affected to.

‘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,’ he wrote.

‘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 cancelled 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,’ he concluded.

The January cuts included the closures of a number of studios, but Hi-Fi Rush developer Tango Gameworks has at least partially survived, with around half the original stuff continuing at the studio under new owner Krafton.

Phil Spencer strikes again (Xbox/YouTube)

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