Microsoft announced today that it would be cutting up to 10,000 jobs at the tech giant across its workforce, with reports stating that the gaming divisions at both Xbox and Bethesda are affected by the layoffs. This was announced exactly one year to the day that Microsoft told the world they planned on acquiring Activision Blizzard for billions.
In a letter sent by CEO Satya Nadella, the company stated the reason for the layoffs was to "align our cost structure with our revenue and where we see customer demand." He cites the global pandemic from 2020 where increased comsumer demand and increased spend, but with the slow-down of those expentitures, Microsoft needs to pivot to "exercise caution" in the face of a looming recession.
Despite this, Nadella also claims that the company will continue to hire throughout the layoff process, notably to help presumably with their efforts to build the next "major wave in computing" with AI.
Reports have come out as well that the gaming divisons at Microsoft are affected by the layoffs, with Bloomberg's Jason Schreier reporting that Bethesda and Xbox will see layoffs. The timing of the announcement seems auspicious as it is exactly one year to the day that Microsoft announced it was spending $68.7 billion to acquire Activision Blizzard. It's also concerning as Microsoft heads into its January Showcase next week coming off a year where the company didn't release any big blockbuster exclusives compared to its Sony and Nintendo rivals.
The extent of the layoffs affecting its gaming segment are unclear, but we'll update this story as more information is known. Nadella's letter mentions Microsoft's better than average severance package, stating that employees get 60-days notice before being laid off, months of severance and health benefits, career transition assistance and more. So while some of those layoff letters could be hitting today, we may not know the full extent for a while as the company is aiming to complete the layoffs by the end of ths Fiscal Year 2023 (which for Microsoft ends on March 31st, 2023).