Microsoft's Major Gaming Shake-Up: 1,900 Layoffs and Leadership Changes in Post-Acquisition Strategy

Microsoft Corp MSFT grabbed investor attention Thursday as reports indicated the company implementing layoffs affecting 1,900 employees across Activision Blizzard and Xbox, equating to about 8% of its overall Gaming division of approximately 22,000 employees.

The decision, confirmed by Microsoft Gaming CEO Phil Spencer in an internal memo, follows the recent integration of Activision, Blizzard, and King teams into Microsoft.

This move is part of an effort to align strategies and execution plans, address overlapping areas, and support the growth of Microsoft’s gaming business, the Verge reports.

As part of this restructuring, the company is reducing roles to create a more sustainable cost structure. 

Additionally, Blizzard president Mike Ybarra is departing the company, with plans to announce a new president next week.

Allen Adham, Blizzard’s chief design officer and co-founder, is also leaving but plans to continue mentoring young designers in the industry.

Due to these changes, Blizzard’s previously announced survival game is being canceled, with staff shifting to new early-stage projects.

This restructuring occurs alongside industry-wide layoffs and follows Microsoft’s $68.7 billion acquisition of Activision Blizzard, completed in October.

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The acquisition, which took 20 months of regulatory battles, led to the departure of former Activision Blizzard CEO Bobby Kotick. Microsoft’s latest leadership changes include Sarah Bond as Xbox president and Matt Booty as game content and studio president, overseeing Bethesda, ZeniMax, and Activision Blizzard.

These layoffs come a year after Microsoft’s previous significant job cuts and ahead of its fiscal second quarter 2024 earnings report, which will include the impact of the Activision Blizzard acquisition for the first time.

Analysts anticipate a strong performance from Microsoft, driven by improving IT budgets and the company’s leadership in generative AI, which offers various revenue streams. They expect Azure’s AI workload growth to boost its second-quarter revenue, offsetting the PC segment decline.

Price Action: MSFT shares are trading higher by 0.99% at $406.57 at last check Thursday. 

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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