(Bloomberg) -- Microsoft Corp. said it is cutting 650 jobs in its Xbox unit, the third such layoffs this year as the company tries to rein in costs and integrate its massive $69 billion acquisition of Activision Blizzard Inc.
The roles to be eliminated are in “mostly corporate and supporting functions,” according to a memo sent to staff by Xbox chief Phil Spencer on Thursday. “No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today.”
Xbox employees had been bracing for further reductions after Microsoft cut 1,900 jobs, many from Activision units and studios, in January. In May, the company announced the shuttering of four studios acquired as part of its $7.5 billion purchase of ZeniMax — one of which was ultimately sold instead. These steps, along with the decision to release some Xbox games on rival consoles, have angered some of the platform’s fans and left them questioning Microsoft’s commitment to building compelling exclusive content.
It has been a brutal year for the games industry more broadly, as it reckons with rising game development costs and tepid growth. Sony Group Corp., Take-Two Interactive Software Inc. and Electronic Arts Inc. are among the major global companies that have cut jobs and shut down marquee projects. Sony this month axed big-budget multiplayer shooter Concord only two weeks after its release, showing little patience for a game that got off to a slow start.
Microsoft completed the Activision acquisition in October, 21 months after it was announced and following a bruising battle to obtain antitrust clearance. The purchase has given Xbox an infusion of new content and talent, but also a challenge in making the deal pay off over the long run.
Changes to Microsoft Gaming
For the past year, our goal has been to minimize disruption while welcoming new teams and enabling them to do their best work. As part of aligning our post-acquisition team structure and managing our business, 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.
I know that this is difficult news to hear. We are deeply grateful for the contributions of our colleagues who are learning they are impacted. In the US, we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition; outside the US packages will differ according to location.
With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs. Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games. No games, devices or experiences are being cancelled and no studios are being closed as part of these adjustments today.
Throughout our team’s history, we have had great moments, and we have had challenging ones. Today is one of the challenging days. I know that going through more changes like this is hard, but even in the most trying times, this team has been able to come together and show one another care and kindness as we work to continue delivering for our players. We appreciate your support as we navigate these changes and we thank you for your compassion and respect for each other.
Phil
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