Microsoft is laying off 650 more Xbox employees after the company laid off 1,900 employees earlier this year

As part of a new wave of layoffs, Microsoft has announced the layoff of 650 employees from its Xbox division. This is the second major job cuts this year in its gaming division. The job cuts follow a previous reduction of around 1,900 jobs in January 2024. According to Microsoft, these layoffs are part of a broader restructuring effort to streamline its gaming business, especially after the high-profile acquisition of Activision Blizzard.

News of the recent layoffs was communicated to employees through an internal memo from Microsoft's gaming chief Phil Spencer. According to Spencer's memo, the latest wave of layoffs will primarily affect corporate and support roles within Microsoft's gaming division. Spencer assured employees that no games, devices or experiences will be canceled and no studios will close as a result of these layoffs.

“Over the past year, our goal has been to minimize disruption, welcome new teams, and enable them to do their best work,” Spencer explained in the memo. He emphasized the company's commitment to long-term success, saying, “With these changes, our corporate and support teams and resources are aligned for sustainable future growth and can better support our studio teams and business units with programs and resources that are scalable to meet their needs,” Spencer said in the internal memo, as reported by The Verge.

According to the memo, Microsoft's recent layoffs will affect employees both in the U.S. and internationally. For affected employees in the U.S., Microsoft is offering severance packages that include severance pay, expanded health insurance benefits, and outplacement services to ease the transition to new employment. Packages for employees outside the U.S. vary based on regional policies and regulations.

Spencer also mentioned that these layoffs would allow Microsoft's enterprise and support teams to better align with studio teams and business units. “Our teams will now be better supported with programs and resources that scale to meet their needs,” Spencer wrote.

Layoffs at Microsoft in 2024

The latest wave of layoffs is in addition to the larger workforce reductions that already took place in January 2024. During that period, Microsoft laid off around 1,900 employees, including well-known figures such as Mike Ybarra. The January layoffs followed Microsoft's acquisition of Activision Blizzard for $68.7 billion, one of the largest deals in gaming history.

Since acquiring Activision Blizzard, Microsoft has focused on minimizing disruption while integrating new teams into its structure. Microsoft says the restructuring is designed to help Microsoft Gaming's corporate and support teams better align with the needs of its studio teams and business units.