The tech giant will cut about 1,900 people, or about eight percent of staff, from its gaming division as it consolidates the blockbuster buyout of “Call of Duty” maker Activision Blizzard. In a memo to employees reported by US media The Verge on Thursday, the head of Microsoft’s gaming division, Phil Spencer, said the cuts would minimize “areas of overlap” between Xbox, ZeniMax, and newly acquired Activision Blizzard.
The company said about half of those cuts will affect staffers at Activision Blizzard. The rest will come from other Xbox and ZeniMax teams. The company said it will fully support the affected workers, including severance benefits informed by local employment laws.
But he added that the company had found some teams not working effectively and had to align resources with “priorities that help us grow.” “The people impacted by this decision have played a critical role in the success of our games, and they should be proud of their accomplishments,” he said. “Microsoft is grateful for the passion and hard work that they have put into their work, and we wish them the best in their future endeavors.”
Some workers who will be let go are unionized Communications Workers of America members representing gaming division workers at various Microsoft subsidiaries. The union says it’s seeking a meeting with the company to discuss the impact of the layoffs on its membership.
“We’re disappointed that this deal isn’t delivering the promised synergies, and we need to reassess our approach moving forward,” the CWA said in a statement. The CWA added that it’s common for acquisitions to result in layoffs, especially when companies are trying to find ways to make their combined businesses profitable.
The gaming industry has been hit with a wave of layoffs this year as many big-name companies struggle to turn a profit amid intense competition for gamers’ dollars. Last week, Riot Games, the popular League of Legends video game maker, announced it was cutting hundreds of jobs. The gaming union has been pushing for more protections for workers in the sector.
It’s not the first time Microsoft has laid off gaming workers, but the latest cuts show how the company is trying to adapt to a changing landscape. The company once led the world in selling personal computers but lost ground to rivals such as Apple and Google as consumers increasingly shifted toward smartphones and tablets. Its Surface laptop line is also struggling to compete with more affordable devices from other manufacturers.
Meanwhile, Microsoft has boosted its presence in the growing market for streaming video services. It recently announced it will acquire a startup specializing in streaming technology for live sports and other events, in a move that underscores its ambition to compete with Amazon and Google in digital entertainment.