Microsoft to lay off 650 Xbox support staff as it looks to rein in costs amid market slowdown

Global tech company, Microsoft said it is laying off 650 staff in its Xbox gaming unit, Bloomberg is reporting. The layoffs, mostly affecting support staff, are the third of its kind this year. According to the report, the reason for the layoff is that the tech giant is trying to check its costs while looking for ways of integrating its $69 billion acquisition of Activision Blizzard.

While Xbox and Microsoft both declined to provide a robust explanation of the matter, a memo that was sent by Xbox chief executive officer, Phil Spencer to the staff revealed the job cuts will affect mostly corporate and support functions.

“We have made the decision to eliminate approximately 650 roles across Microsoft Gaming—mostly corporate and supporting functions—to organize our business for long-term success,” Phil Spencer said in the memo.

Xbox layoffs come in the face of Activation Blizzard deal

Microsoft finally completed its deal to acquire the gaming company, Activision Blizzard last year. This acquisition boosted its stock in the video-gaming market because it led to the addition of best-selling titles like “Call of Duty“, with which it was able to better compete with industry leader, Sony.

However, the acquisition also led the company to embark on a massive job-cut drive, mostly targeted at its gaming wing, Xbox. The technology giant announced in January that it would let go of 1,900 employees at Activision Blizzard and Xbox. This 650 layoff is the third instalment of that drive.

Generally, it has been a tough year for the gaming industry as development costs continue to witness astounding increases in the face of slowing growth. This was coupled with a slow recovery in spending by gamers after player engagement rates peaked during the pandemic. Both factors have led to mass layoffs, studio shutdowns and project cancellations in the first half of the year.

Sony Group Corp., Take-Two Interactive Software Inc. and Electronic Arts Inc. are among the global companies to have also laid off staff and shut down marquee projects. In May, Xbox shut down a number of gaming studios, including Arkane Austin.

This time, however, “no games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments,” the CEO, Phil Spencer’s memo. says.

Nonetheless, the constant layoffs and shutting down of studios are not going down well with fans. Those, along with the decision to release some Xbox games on the competitor’s consoles, have really angered some of the platform’s fans and have left them questioning the brand’s commitment to building exclusive content.

The underwhelming performance of the gaming industry forced research firm Newzoo to recant its annual growth forecast for the global videogame market last month. This was as console sales underperform amid a relatively light release schedule of games this year.

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