Microsoft to cut 650 jobs in Xbox Games unit to offset costs post Activision Blizzard acquisition

Microsoft said it is cutting 650 jobs in its Xbox unit, the third such layoff this year as the company tries to rein in costs and integrate its $69 billion acquisition of Activision Blizzard, Bloomberg News reported on Thursday.

The job cuts will affect mostly corporate and supporting functions, the report said, citing a memo sent to staff by Xbox chief Phil Spencer. As per the report, the company is slashing jobs mostly in the marketing and HR departments. The report also says the company wasn't closing any of its studios to rein in the costs post the acquisition of Activision Blizzard.

Microsoft did not immediately respond to a Reuters request for comment.

The technology giant had said in January it would let go of 1,900 employees at Activision Blizzard and Xbox.

In May, Xbox had shut down a number of gaming studios, including Arkane Austin, as the gaming industry grapples with rising game development costs and lukewarm growth.

It is worth noting that Microsoft acquired Activision Blizzard for $95.00 per share in an all-cash transaction in 2022. The transaction valued Activision Blizzard at $68.7 billion. The transaction included franchises from the Activision, Blizzard and King studios like “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and “Candy Crush,” in addition to global eSports activities through Major League Gaming.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms...We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all," Satya Nadella, chairman and CEO, Microsoft, had said at the time.

“The combination of Activision Blizzard’s world-class talent and extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry,” Bobby Kotick, CEO, Activision Blizzard, had said at the time.

Microsoft completed the acquisition of Activision Blizzard in 2023.