Xbox Layoffs, Game Cancellations After Acquisition Blitz Continue

from the liar-liar dept

It’s no secret that starting during the onset of the pandemic, as well as in its aftermath, the video game industry has undergone a period of consolidation. This is quite common during times of economic flux and/or turmoil, but Microsoft/Xbox appeared to go after acquisitions in something of a blitz. While Xbox gobbled up several studios, the apex of this blitz was its controversial acquisition of Activision Blizzard. The FTC attempted to oppose the $69 billion deal unsuccessfully, arguing that the deal would be bad for customers and the industry as a whole, as these deals typically end with laid off workers, the closing of studios for “efficiency” reasons, and fewer game titles hitting the market. Microsoft responded to that by insisting that those studios would undergo a limited integration with the overall Microsoft ecosystem and that the “vertical” nature of the acquisition meant that layoffs over overlapping roles wouldn’t happen. And so the deal was consummated in October of 2023.

The layoffs began almost immediately in January of 2024. Roughly 2,000 staff had their employment terminated, including staff from the Activision Blizzard studios. The stated reason for those layoffs in part was “areas of overlap” across the companies, or the very thing Blizzard promised the courts it wouldn’t do. According to Xbox, this would allow the company to “deliver ambitious games on more platforms and in more places than ever before” and to allow for “sustainable growth.” The FTC attempted to appeal its loss, pointing out that both these layoffs and the changes Xbox made to enshittify its Game Pass product were in direct contradiction to promises made during the FTC fight. That effort ultimately ended in May of this year when the Ninth Circuit refused to issue any kind of injunction and the FTC dropped its case.

Having gotten away with its lies to the courts, Xbox is now continuing its layoffs apace and canceling games as a result.

Reports and rumors of massive layoffs at Xbox have been building since late last month, and the first blood has now been spilled. Bloomberg reports that Candy Crush maker King is cutting 200 employees, or roughly 10 percent of its 2,000-person headcount, while multiple games across various Xbox studios, including the Perfect Dark reboot, have been canceled.

The Seattle Times reports that this is part of a larger 9,100-person cut to personnel across the tech giant. “We continue to implement organizational and workforce changes that are necessary to position the company and teams for success in a dynamic marketplace,” a Microsoft spokesperson told VGC, with Microsoft Gaming CEO Phil writing in a memo to staff that the layoffs “end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.”

Along with the layoffs are the cancellation of several games, most of them new IP. Since January of 2024, the staffing cuts have been on a near continuous drip, but now that the FTC is no longer paying attention it seems Xbox is opening the spigot. And it is starting to sound like it won’t just be percentage layoffs at these studios, but the closure of some of those studios as well.

Around 600 more layoffs followed in September, with Microsoft saying at the time that no games were canceled as a result of that round of cuts.

That’s unlikely to be the case this time around, with the full extent of the culling rumored to potentially include entire studios. Microsoft’s expansive portfolio of game development teams includes ones like Obsidian Entertainment which have prodigiously shipped almost half a dozen games since being bought, as well as others like Undead Labs which have spent years working on sequels that have yet to materialize. Xbox has also been retreating from its console hardware business amidst reported pressure to improve its bottom line, leading to major first-party exclusives like Sea of Thieves and Gears of War going multiplatform on PlayStation 5.

So, these acquisitions were not going to result in layoffs. Then, when the layoffs began, they were done to position Xbox for sustainable growth and to allow for more titles to be brought to more platforms. Now, the predicted growth has morphed into further, more massive layoffs, while the promise of more titles has morphed into canceled games and shuttering potentially entire studios instead.

I realize that regulatory bodies in America these days are roughly as useful as a fishnet condom, but are they really going to allow such a blatant example of lies and hypocrisy, all to the detriment of the American worker and consumer, go completely unaddressed?

Filed Under: layoffs, video games, xbox

Companies: activision blizzard, microsoft