Microsoft lays off 650 videogame workers

livemint.com:

Microsoft is laying off approximately 650 employees from its videogame business, the tech giant’s latest move to cut costs after its $75 billion acquisition of Activision Blizzard last year. The layoffs affect mostly workers in corporate and support roles and are being done to “organize our business for long term success," said Phil Spencer, chief executive of Microsoft Gaming, in a company email Thursday reviewed by The Wall Street Journal. No studios will be closed, nor will any games, devices or experiences be canceled, he said.

Microsoft’s game-division layoffs are part of a significant downsizing in the global games industry. While demand for interactive entertainment shot up during the pandemic—following decades of mostly steady growth—consumer spending declined in 2022 and has rebounded only modestly since then. The move also comes as Microsoft has been investing heavily in artificial intelligence, including more than $13 billion in funding for ChatGPT-maker OpenAI.

The tech giant said it spent $19 billion on capital expenditures and equipment in the three months that ended in June. The figure is the same amount the company spent in 2019 for the entire year. The gaming-division cuts Thursday follow the Xbox maker’s decision to let go of roughly 1,900 workers from the unit at the start of the year and the closure of three of its studios in May.

In January 2023, Microsoft laid off 10,000 employees across all of its businesses, including Xbox personnel. The company then gained around 10,000 employees with the October acquisition of Activision, the biggest deal in its history. So far this year, game companies overall have let go more than 11,500 employees, according to an online tally of termination announcements and