Despite having previously claimed that the recent round of Activision Blizzard King layoffs were undertaken out of a need to cut down on “areas of overlap” within the company, Microsoft Gaming CEO Phil Spencer now says the job cuts were done in light of shrinking profit projections for the coming year.
RELATED: Microsoft Slashes Video Game Division, Cuts 1,900 Jobs Across Activision Blizzard, Xbox, And ZeniMax
As previously reported, on January 25th, Microsoft announced that they would be cutting roughly 1,900 jobs across their Activision Blizzard, Xbox, and ZeniMax Studios.
“It’s been a little over three months since the Activision, Blizzard, and King teams joined Microsoft,” Spencer told employees in an internal memo announcing the news, per a copy obtained by The Verge. “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.”
“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,” he explained. “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.”
However, it now seems this explanation, at the very least, did not tell the full story.
Asked during a March 2024 interview with Polygon whether the need to reduce their headcount was due to an internal Microsoft problem or was representative of a larger industry trend, Spencer asserted, “It’s a little bit of both.”
“But I’ll say the thing that has me most concerned for the industry is the lack of growth,” said the Microsoft exec. “And when you have an industry that is projected to be smaller next year in terms of players and dollars, and you get a lot of publicly traded companies that are in the industry that have to show their investors growth — because why else does somebody own a share of someone’s stock if it’s not going to grow? — the side of the business that then gets scrutinized is the cost side. Because if you’re not going to grow the revenue side, then the cost side becomes challenged.”
To this end, Spencer further detailed, “We’re a business. I’ve said over and over. I don’t get any luxury of not having to run a profitable growing business inside of Microsoft. And we are that today.”
“But just across the industry — you mentioned it, and in sitting here at GDC, I reflect on friends of mine in the industry that have been displaced and lost their jobs and how just, I don’t want this industry to be a place where people can’t, with confidence, build a career,” he told Polygon. “So that’s why I keep pivoting back to: How does this industry get back to growth? But to your question, for us as Xbox or any of the teams that are out there, it is really an outcome of an industry that’s not growing.”
“It can grow and it will grow again,” he But you see this time right now and the implications have human impact. And we should all reflect on that and think about it.”
