On Thursday (January 25) local time, tech giant Microsoft announced in an internal memo that the company would lay off 1,900 people in the gaming division, accounting for about 9% of the division's 22,000 employees.
Phil Spencer, CEO of Microsoft Gaming, called the layoffs a "painful decision" in the letter. As for the specific reason for the layoffs, Microsoft mentioned that Activision, Blizzard, and King teams have been joining the company for three months, and in order to support the sustainability of the cost structure, in 2024, the leadership of Microsoft Games and Activision Blizzard is committed to aligning the strategy and execution plan with a sustainable cost structure. Together, the two parties set priorities and identified areas of overlap to ensure the best growth opportunities were identified.
Blizzard's president and chief design officer will leave their posts
"Survival game" Odyssey is difficult to survive
On the same day, Matt Booty, Microsoft's vice president of gaming business, wrote in a separate memo that Blizzard President Mike Ybarra would also be leaving the company. Ybarra confirmed the news on social media, "I want everyone to know that today is my last day at Blizzard. It's been a great privilege to lead Blizzard through an incredible time, to be part of the team, and to shape it for the future. Having spent more than 20 years at Microsoft, with the Activision Blizzard acquisition complete, it's time for me to become Blizzard's biggest fan once again, from outside (the company). ”
Screenshot of Blizzard President Mike Ybarra's social media.
Matt Booty also mentioned in the memo that Activision Blizzard's co-founder and head of design, Allen Adham, is leaving his post and that Blizzard will stop developing a new survival game (rumored to be codenamed "Odyssey") that was revealed last year. It is reported that the "Odyssey" was announced in early 2022 after more than four years of development, and the development team doubled in size at that time. Today, Matt London, the game's former associate narrative director, wrote on social media: "I've left Blizzard, like the rest of the game's team. ”
Odyssey is billed as a new world "unlike any other world Blizzard has ever created", but players don't know much about the title other than two concept art. And within Blizzard, the game is very popular. At the time of the announcement in January 2022, current and former Blizzard employees publicly praised the team and the project itself. "This is a project that will have a significant impact on the industry. Jeffrey Welchu, the team's executive tactical producer at Riot, who previously co-led the survival game project at Blizzard, said.
According to public information, in October 2023, Microsoft completed the acquisition of the game company Activision Blizzard, which owns many world-renowned IPs such as "World of Warcraft", "Call of Duty", "StarCraft", and "Diablo". The acquisition, which lasted 22 months and was valued at $69 billion, was Microsoft's largest deal ever and one of the 30 largest acquisitions in history. According to rough statistics, about 8,500 employees of Activision, about 6,000 people in Blizzard, and about 2,500 people in the King division have joined Microsoft, bringing the total number of employees in the entire gaming department to 21,800.
According to previous media reports, Blizzard President Mike Ybarra talked about the impact of Microsoft's acquisition on Blizzard, the future of Blizzard, and the return of the national server for the first time in a formal occasion in an interview with foreign media The Verge at the 2023 BlizzCon Carnival. Ybarra said BlizzCon 2023 is the beginning of a "new era" for the company. Prior to joining Blizzard, Ybarra spent 8 years under Spencer.
It is worth mentioning that when Microsoft announced the acquisition of Activision Blizzard in early 2022, there was an analysis predicting that there would inevitably be a move to streamline personnel after the completion of the transaction. It is understood that Microsoft's last large-scale layoffs were a year ago, when the company announced plans to lay off 10,000 employees to help it focus on strategic priorities such as artificial intelligence.
The Communications Workers Association (CWA) commented on the new round of layoffs, which clearly shows that even in an extremely lucrative industry and working for a successful company, livelihoods cannot be secured without a voice in the job.
But the above news does not seem to affect Microsoft. On January 25, 2024 local time, Microsoft's U.S. stock closed at $404.87 per share, up 0.57%, with a market value of $3 trillion. This is the first time that Microsoft has reached a market value of $3 trillion, and Microsoft is also the second company in history to reach a market value of $3 trillion after Apple.
The wave of layoffs is spreading across industries around the world
According to media reports, Bob Bakish, the chief executive of Paramount, a well-known Hollywood media company, announced on Thursday that he would lay off employees, but did not disclose the specific scale of the layoffs. In a memo to employees, it said the company wanted to operate in a leaner way and reduce expenses, but did not disclose the number of people involved.
On January 25, local time, Levi's, a century-old jeans brand in the United States, also announced a layoff of 10%-15% of its workforce after announcing its financial report for the fourth quarter of 2023. According to Levi's's financial report, the company's net revenue in the fourth quarter was $1.64 billion, up 3% year-on-year, slightly below analysts' expectations of $1.66 billion, and adjusted EBIT in the fourth quarter was $200 million, up 41% year-over-year, compared to analysts' expectations of $200 million.
A number of companies, including tech giants such as Google's parent company Alphabet and Amazon, have recently announced layoffs. According to Layoffs.fyi, 76 tech companies laid off more than 21,000 employees in January. According to a report released earlier this month by Challenger, Grey and Christmas, the tech industry laid off 168,000 jobs in 2023, the highest number of layoffs of any industry, including Microsoft's 10,000 layoffs.
Microsoft is expected to report its second-quarter fiscal 2024 earnings report next week, which will provide the first update on the impact of the Activision Blizzard acquisition on the company.
(Source: Comprehensive Daily Economic News, China Fund News, Finance Associated Press, Surging News, IT Home, Ranger Network, Geek Network)