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Microsoft is laying off staff in multiple divisions, including security, devices, experiences, and gaming. Microsoft confirmed the layoffs to PCMag but didn't say exactly how many people are being let go.
It described the number of job losses as "very small" and separate from the performance-based cuts announced last week. Impacted staff began receiving notifications on Tuesday.
"Organizational and workforce adjustments are a necessary and regular part of managing our business," a Microsoft rep tells PCMag via email, adding: "We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners."
A separate report this week also revealed that Microsoft considered shutting down its Xbox gaming division in 2021. Microsoft CEO Satya Nadella told two people at the time that the company had to either acquire larger game studios to bolster its Game Pass subscription service or ditch gaming entirely, The Information reports.
It took the acquisition route. In 2021, Microsoft bought Bethesda Studios for $7 billion and Activision Blizzard for $75.4 billion, the latter of which is its most expensive acquisition to date. It's unclear whether any of the gaming division layoffs impact Activision or Bethesda staff.
US securities filings show that Microsoft's gaming business hasn't performed as well as the company hoped in the first half of last year, with gaming revenue only growing 5.8% instead of the projected 11%. The Information notes that these projections help determine Nadella's pay package. Last year, Microsoft Gaming CEO Phil Spencer said he's made "some of the worst game choice decisions" in the past by rejecting titles like Destiny and Guitar Hero.
In October, Microsoft said the past year had forced the gaming industry to face "economic challenges that required us, like others, to make difficult decisions for our business and teams," presumably referring to the nearly 2,000 job cuts made earlier that year that involved layoffs at Activision Blizzard.
But Microsoft is still "all in on gaming" and presents statistics that suggest a sunnier picture. An Activision rep tells PCMag via email that Microsoft is seeing over 500 million monthly players across Xbox, PC, and mobile. The rep also noted that Call of Duty: Black Ops 6 was its biggest game launch ever, spurring a record number of new Game Pass subscriptions on launch.
More broadly, the video game industry has faced mass layoffs for years, and Microsoft shut down smaller studios Arkane Austin and Tango Gameworks in May. Metaverse thought leader Matthew Ball—who's been lauded by the likes of Epic Games CEO Tim Sweeney and Meta CEO Mark Zuckerberg—called the gaming industry "tremendous yet troubled" in 2024, arguing that it remains in a state of "growing crisis" due to a myriad of factors, including poor-performing or canceled titles, increased economic pressure, and the lingering economic effects of the COVID-19 pandemic.
Editor's Note: This story has been updated to include comments from Microsoft and Activision.