Harsh news today as the expected layoffs have come following the acquisition of Activision Blizzard by Microsoft. 1900 Staff have been laid off, primarily from ABK, with more from Xbox divisions. Xbox think this will set them up for the future, and their investors agree - but as key Activision leadership are let go, and the survival game is cancelled - what actually does come next?

The Price of Consolidation

Microsoft lays off 1,900 Activision Blizzard and Xbox employees

The cuts primarily affect Activision Blizzard employees.

The Verge

One week after their Developer Direct, focussed on the future of Xbox and their first party tiles, Microsoft has announced that they will be laying off 1,900 employees from the Gaming Division.
The Verge has obtained an internal memo from Phil Spencer, sent to the Microsoft Gaming Division, announcing the cuts.
This happened early on Thursday morning - pre 7am California time.

This is part of a new plan for the whole team at Xbox: “Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth.” - they're framing everything happening as planning for the future.
1900 of 22,000 people are being laid off - currently beating former Leader Unity by 100 staff in Layoffwatch 2024 - where we’ve reached 5,900 so far for 2024, 60% of 2023’s total

Blizzard Leader Mike Ybarra has chosen to leave the company - with a new President to be appointed next week.
At Blizzcon, Ybarra had a different tune when speaking to press:

Blizzard’s Chief Design Officer and Co Founder - Allen Adham is going to also leave.

“As one of Blizzard’s cofounders, Allen has had a broad impact on all of Blizzard’s games. His influence will be felt for years to come, both directly and indirectly as Allen plans to continue mentoring young designers across the industry,” says Booty.

The Survival Game from Blizzard has also been cancelled - some devs on that title are being moved to other early in development projects from Blizzard.
Dan Hay, who led Far Cry 3 then produced the rest of the series through to 6, had come onboard the Survival project to steer it in 2022 - so they were investing until relatively recently.

All of this comes from a memo from Booty, captured by the Verge, reproduced here:

Sources tell Jason Schreier of Bloomberg that the individuals being laid off have not yet been told - but as we went to press, individuals from Zenimax teams began sharing the news that they had been laid off.
The memo above confirms that this will be happening via meetings scheduled from today for Xbox staff - with the leadership of teams then taking stock when those meetings are concluded.

For Blizzard in particular - the confirmation that this will affect all aspects of the company is clear:

Today’s actions affect multiple teams within Blizzard, including development teams, shared service organizations and corporate functions. As part of this focus, Blizzard is ending development on its survival game project and will be shifting some of the people working on it to one of several promising new projects Blizzard has in the early stages of development.

Even if the individuals who are going to be impacted don't actually know yet - as exemplified best by the fact that staff are reaching out to anyone who might know something.

Per the Verge’s sources, they understand this to be “primarily laying off roles at Activision Blizzard, some Xbox and ZeniMax employees will also be impacted by the cuts."
To some degree, this was always coming.
The merger of Xbox and Activision Blizzard was going to lead to layoffs as duplicated roles were cut.

That is the unfortunate reality of two companies who perform similar roles merging - you won't need two heads of marketing for example.
The duplication of work does not always require the duplication of staff - because you can just have the original number of staff doing twice the work.
From the moment the acquisition was announced - there were going to be people who were no longer employed at Activision Blizzard as a result of that, as well as some very unlucky folks who would see the layoffs go the other way into Microsoft owned roles.

(In a way, this means Bobby Kotick is to blame for these layoffs for choosing to sell the company)

When the deal closed, Spencer commented that “We’ll do this in a culture that strives to empower everyone to do their best work, where all people are welcome, and is centered on our ongoing commitment of Gaming for Everyone.”
But that doesn’t mean that he wasn’t also reviewing duplicate roles and working out what staff he didn’t need for the new Activision Blizzard.

However, it’s also the same ~10% layoff total we’ve been seeing across every industry.
This is relevant because of the context of this whole thing - the timing for these layoffs is an extra bonus for the company.

Helpfully for Microsoft, this happened one week before Microsoft’s second quarter financial results were due to be published, on Tuesday 30th January.
When the company would have to reckon with the impact of the ABK purchase on their balance sheet.
As such, round of layoffs leaves Microsoft able to promote their forethought in dealing with the impact ahead of that showing up on the results to shareholders.
This means they get to claim to be fiscally responsible - and therefore a worthy target for investment.

And how has the market reacted?
Look, they’re so happy!

These layoffs as of time of writing have not yet been externally announced by Microsoft.
They have not yet given comment to the press on what is happening and who is affected.
However - even before that, staff are not yet aware of who will be laid off - and whether they still have roles at the company.
There are people who are potentially still asleep and unaware of the maelstrom into which they will wake.

We'll be following up on this as more news breaks - and our best wishes to those who are currently waiting to find out they're affected.