An IGN report says Microsoft has begun a new round of mass layoffs across its gaming division, beginning with a 10% reduction—approximately 200 people—at social game developer King. Layoffs are also being announced at other European studios, according to the report, while US-based studios will be informed about job losses later today.
Microsoft announced its intention to fire 3% of its staff, amounting to just under 7,000 people, in May; looming cuts to the company's game business were first reported last week. The company previously eliminated 10,000 jobs in 2023—just one year after it announced its intention to acquire Activision-Blizzard for $69 billion—and over 2,500 more in 2024.
Which isn't to suggest that Microsoft is suffering greatly, or at all, for that matter. CEO Satya Nadella said the company put up "record performance" in its 2024 annual report: "We delivered over $245 billion in annual revenue, up 16 percent year-over-year, and over $109 billion in operating income, up 24 percent."
It's going great in the company's Xbox division too, according to a memo sent to employees by Phil Spencer. A Microsoft representative confirmed with PC Gamer that the reported memo is accurate.
"I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before," Spencer wrote. "Our platform, hardware, and game roadmap have never looked stronger. The success we're seeing currently is based on tough decisions we've made previously.
"We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities. We will protect what is thriving and concentrate effort on areas with the greatest potential, while delivering on the expectations the company has for our business. This focused approach means we can deliver exceptional games and experiences for players for generations to come."
Naturally, Spencer also said putting thousands of people out of work will "increase agility" at Microsoft, because of course he did.
It's quite a thing to tell people that everything is going great and you're going to "protect what is thriving and concentrate effort on areas with the greatest potential," while simultaneously showing them the door. Microsoft's priority these days, lest there be any question, is AI: Nadella leaned heavily into the company's "AI platform shift" in the 2024 annual report, and Microsoft is also reportedly increasing pressure on employees to use AI tools internally.
Is it a good sign when you have to basically threaten your own employees to get them to use the products you're basing the future of your company on? I'm not a billionaire CEO so I can't say, but I do wonder if firing people who make a product people want so you can divert resources into making a product that even your own people clearly don't want is a sustainable long-term strategy.
A CNBC report says today's layoffs are part of yet another round of cuts at the company that will put roughly 9,000 people out of work. In a statement provided to PC Gamer, the Microsoft representative said the number represents less than 4% of the company's total workforce, and noted that the gaming division is being impacted by the cuts but does not represent the majority of them.
"We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace," the spokesperson said.
