Microsoft announced plans to lay off 1,900 employees at Activision Blizzard and Xbox this week. Although they are primarily laying off roles at Activision Blizzard, some employees with ZeniMax and Xbox will be impacted.
These cuts work out to roughly 8% of the overall Microsoft Gaming division which stands at approximately 22,000 employees in total. CEO Phil Spencer confirmed the layoffs in an internal memo obtained by The Verge.
It’s been a little over three months since the Activision, Blizzard, and King teams joined Microsoft. As we move forward in 2024, the leadership of Microsoft Gaming and Activision Blizzard is committed to aligning on a strategy and an execution plan with a sustainable cost structure that will support the whole of our growing business. Together, we’ve set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth.
As part of this process, we have made the painful decision to reduce the size of our gaming workforce by approximately 1900 roles out of the 22,000 people on our team. The Gaming Leadership Team and I are committed to navigating this process as thoughtfully as possible. The people who are directly impacted by these reductions have all played an important part in the success of Activision Blizzard, ZeniMax and the Xbox teams, and they should be proud of everything they’ve accomplished here. We are grateful for all of the creativity, passion and dedication they have brought to our games, our players and our colleagues. We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws. Those whose roles will be impacted will be notified, and we ask that you please treat your departing colleagues with the respect and compassion that is consistent with our values.
Looking ahead, we’ll continue to invest in areas that will grow our business and support our strategy of bringing more games to more players around the world. Although this is a difficult moment for our team, I’m as confident as ever in your ability to create and nurture the games, stories and worlds that bring players together.
Phil
Mike Ybarra and Allen Adham Step Down
In addition to these layoffs, Blizzard president Mike Ybarra, who stepped in for J. Allen Brack, has made the decision to leave the company. Matt Booty, Microsoft’s president of game content and studios, made a statement saying, “As many of you know, Mike previously spent more than 20 years at Microsoft. Now that he has seen the acquisition through as Blizzard’s president, he has decided to leave the company.”
Allen Adham, co-founder and chief design officer of Blizzard, is also departing. “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.
Blizzard team,
As you may have read in Phil’s note, today is a challenging day as we say goodbye to some of our colleagues. This is a difficult process, but it is one that will best enable Blizzard and Xbox to deliver ambitious games for our players on more platforms and in more places than ever before. We are moving forward with a more focused strategy across Microsoft Gaming that sets us up for sustainable growth and aligns our talent and resources to our top priorities.
In addition to the events today, Mike Ybarra and I have been discussing his future and some of his personal passions for some time. As many of you know, Mike previously spent more than 20 years at Microsoft. Now that he has seen the acquisition through as Blizzard’s president, he has decided to leave the company. As we move forward, we will continue to build on the positive momentum that Mike created and strive to continue exceeding the expectations of Blizzard’s players. I want to thank Mike for his leadership and for his partnership and counsel since the deal closed. I know he plans to travel and spend more time with his family. We wish him the very best.
Additionally, Allen Adham, Blizzard’s Chief Design Officer, is leaving the company. 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.
The new Blizzard President will be announced next week.
What Happens Next
Those who are impacted are being informed in meetings starting today. Given the challenging day ahead, anyone who is set up to work from home and would prefer to, can work remotely today. Due to time zones and local holidays, some impacted employees in APAC and EMEA will be informed later this evening and into early next week. After the notifications are complete, leaders will bring their teams together. Please be mindful of this process in your conversations and outreach during these next few days.
Details on Today’s Actions
The changes announced today reflect a focus on products and strategies that hold the most promise for Blizzard’s future growth, as well as identified areas of overlap across Blizzard and Microsoft Gaming. 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.
No matter the reason behind these decisions, they are never made lightly. Changes like these affect the lives of colleagues and friends, and we are all grateful for their meaningful contributions to Blizzard and its world class lineup of games. As Phil stated, we will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws.
I understand that this is a challenging time and that it can be a lot to process. I haven’t met many of you yet, and hearing about these decisions from me may be difficult. Today, I am here on Blizzard’s Irvine campus, and I am personally committed to supporting you as teams and individuals, keeping you informed, and approaching this transition period with care and transparency.
Thank you for working through these changes with us. Together we will continue to create amazing games for our players, with a culture that empowers everyone to be their most authentic selves and do their best work.
Matt
These layoffs represent a hurricane of cuts across the industry, taking place the same month other major companies like Google, Discord, Twitch, eBay, Unity, and Riot Games announced cuts.
Microsoft acquired Activision Blizzard in October 2023 for $68.7 billion, the largest deal in the history of gaming, following almost 2 years of struggle with regulars in the US and the UK. Bobby Kotick, CEO of Activision Blizzard, stepped down in December 2023, with no replacement appointed by Microsoft. However, Sarah Bond was recently promoted to Xbox president.
Microsoft’s layoffs in the past year or so have affected about 10,000 employees, and the company is reporting Q2 2024 earnings next week which includes results from the impact of the acquisition of Activision Blizzard.
Blizzard’s Survival Game Canceled After 6 Years
Blizzard Entertainment’s untitled survival game, informally announced in 2022, was canceled over issues with the engine during its 6 years of development, according to a report by Bloomberg.
Despite the news, Blizzard did not really comment on why the game had been canceled just two years after the announcement. The report by Bloomberg details struggles around the game’s engine, which was prototyped with Unreal Engine from Epic Games before “Blizzard executives decided to switch, in part, because it wouldn’t support their ambitions for vast maps supporting up to 100 players at once.”
The game, titled Odyssey according to Bloomberg, switched from Unreal to an in-house engine called Synapse, which Blizzard originally intended for mobile games and “envisioned as something that would be shared across many of its projects.”
Switching engines caused major problems in the development of Odyssey and was catalyzed by Microsoft’s acquisition of Activision Blizzard.
Despite the struggle with the engine, the game’s development made progress, and Blizzard reportedly wanted to expand the Odyssey team to target a release in 2026. However, Bloomberg reports that “even that seemed overly optimistic to some developers.”