By Michael Scott
Microsoft Corp is joining the trend of gaming makers to downsize their workforce amid the sector’s downtrend. By press time, nearly 6,000 individuals had fallen victim to the mass layoffs that began at the onset of 2024.
Microsoft Corp accounts for nearly a third of the job cuts following the move to sack 1,900 employees previously engaged in the Xbox and Activision Blizzard.
Layoffs Top Activision Blizzard’s Restructuring Efforts
A month into 2024 has seen the gaming sector downsize its staff, citing headwinds in the segment. Although barely four weeks into 2024, Microsoft is entangled in the depressing trend by cutting ties with 1,900 employees.
Microsoft decided to downsize its workforce at a period when it became the second entity ever to realize a $3 trillion valuation. Most of the layoffs, constituting 8% of the gaming division workforce of 22,000, are within the Activision Blizzard division.
Microsoft acquired Activision Blizzard in a $68.7 billion deal concluded three months ago following a 20-month battle with UK and US regulators.
The acquisition saw Activision Blizzard chief Bobby Kotick resign in December. The exit of the division’s staff led to the reported cancellation of Blizzard’s survival game. The axe claims the division’s president, Mike Ybarra, alongside the chief design executive Allen Adham, are among those exiting the company.
The contingent exiting the Blizzard division will not lead to the cancellation of other game development. The staff remaining and previously engaged in the now-dead game are shifting to other departments.
Microsoft’s Xbox Invests in AI-powered Game Development
A review of the internal memo conveyed by Xbox executive Phil Spencer assures the laid-off employees that Microsoft will provide severance and other benefits guided by local employment laws. The memo added that the company desires to sustain investment in high growth opportunities for the business though noncommittal on the specific areas.
Notably, Xbox invested in the AI-powered game development toolkit in late 2023. The move attracted criticism from video game talent, who argued that such tools would translate to huge layoffs and compromise the quality of games.
Gamers oppose Microsoft’s push for AI gaming following the revelation that Blizzard was reportedly experimenting with AI to design future game characters.
The Thursday, January 25 publication on Reuters indicates that the Communications Workers of America (CWA) voiced its concerns that the layoffs show even those working at the successful entities within the extremely profitable industries have their livelihood vulnerable.
The union group representing several game employees within several of Microsoft’s subsidiaries warned that livelihoods are vulnerable when individuals lack a voice on the job. The CWA assured that it would not relent in supporting its members working at Microsoft and across the larger video game sector who seek a union voice on the job.
ZeniMax’s Wayne Dayberry revealed that layoffs had become a norm within the video game industry despite the companies delivering huge profits.
Generative AI Tools Fueling Layoffs in Gaming Industry
The extent to which Microsoft’s desire for AI propelled the recent layoffs round remains uncertain. Nonetheless, the emergence of generative AI tools is undoubtedly fueling concerns about the likely cause of the series of layoffs that began in 2023.
The layoffs announced by Microsoft came months after Xbox witnessed leadership structuring where Sarah Bond assumed the president’s role to lead all platform and hardware projects. The changes saw Matt Booty promoted to head the game content and studios with oversight roles over Bethesda, Activision Blizzard, and ZeniMax studios.
The announcement to cut 1,900 is yet to match the big layoff Microsoft announced last year, affecting 10,000. Labor stakeholders admit the difficulty of proving causation in multiple layoff cases. Nevertheless, the correlation of AI to layoffs is proving a disturbing issue for most industry workers.
A review of the layoff season 2024 shows that Riot Games cut ties with 530 employees. The gaming studio assured the departing staffers would receive six-month severance pay to lighten the burden.
The list of gaming-related firms that downsized their staff is growing, with Twitch, Discord, and Unity announcing layoffs. Besides, Pixelberry Studios from Nexon announced a layoff that takes the tally of workers who lost their jobs in January to 6,000, per Kotaku data.
Editorial credit: Sergei Elagin / Shutterstock.com