Xbox lays off 1,900 developers, cancels Blizzard’s survival game

By Tomas Franzese January 25, 2024

A hunter crouches before footprints in Blizzard concept art. — Concept art from a now-cancelled Blizzard survival game. Blizzard Entertainment

Microsoft is laying off around 8% of its Gaming Workforce, affecting game developers across Xbox, ZeniMax Media, and the newly acquired Activision Blizzard.

The Verge reported on these layoffs Thursday morning, sharing an internal memo from CEO of Microsoft Gaming, Phil Spencer, that revealed Microsoft is laying off 1,900 of 22,000 employees this week. Spencer explains that Microsoft Gaming “set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth,” following the acquisition of Activision Blizzard in October 2023, and decided to “reduce the size of our gaming workforce” as part of that process. Spencer says that Microsoft will give those laid off “severance benefits informed by local employment laws.”

Blizzard Entertainment is being hit particularly hard by this restructuring. Blizzard president Mike Ybarra and Chief Design Officer Allen Adham are leaving the company, and a previously teased survival game that Blizzard was working on has been canceled. In an internal memo obtained by The Verge, Microsoft’s Game Studios and Content President Matt Booty says that developers on that survival game project not laid off will be moved to “one of several promising new projects Blizzard has in the early stages of development.”

The video game industry saw a massive number of layoffs over the course of 2023 from companies like Embracer Group, Microsoft, and Bungie. This dour trend has unfortunately continued into 2024. Earlier this week, League of Legends‘ Riot Games laid off 530 workers, shutting down Riot Forge and putting Legends of Runeterra on the backburner in the process.

Editors' Recommendations

Topics

Gaming Staff Writer

Tomas Franzese is a Staff Writer at Digital Trends, where he reports on and reviews the latest releases and exciting…

Gaming

Microsoft gives Activision Blizzard cloud gaming rights to Ubisoft

Microsoft's Xbox Cloud Gaming Service Enters Beta This Week

Microsoft announced its intention to grant Ubisoft, the publisher behind series like Assassin's Creed and Far Cry, the cloud streaming rights for Activision Blizzard titles if Microsoft's acquisition of the Call of Duty publisher goes through.
This deal was made in order to appease the U.K.'s Competition and Markets Authority (CMA). Microsoft has not had an easy time trying to acquire Activision Blizzard as it has run into heavy resistance from regulatory bodies like the U.S. Federal Trade Commission (FTC) and the U.K.'s CMA. The CMA's complaints centered around the potential monopoly Microsoft could have on cloud gaming if the deal were to go through. There was speculation that Microsoft would divest its U.K. cloud gaming efforts to appease the CMA, but it has now presented this new plan that would technically make it give up control of Activision Blizzard game-streaming rights worldwide for the next 15 years.
In a blog post, Microsoft President Brad Smith explainsed that if the Activision Blizzard acquisition happens, Microsoft will give "cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years" in perpetuity following a one-off payment.
Essentially, Ubisoft will be the one deciding which cloud gaming platforms and services to put Activision Blizzard games on, not Microsoft. Smith claims that this means "Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service -- Xbox Cloud Gaming -- or to exclusively control the licensing terms of Activision Blizzard games for rival services," and that Ubisoft will allow them to honor existing agreements with companies like Nvidia.

Ubisoft has been cloud gaming friendly over the past several years, eagerly putting its games on services like Google Stadia and Amazon Luna. With this deal, Ubisoft says it plans to bring Activision Blizzard games to its Ubisoft+ subscription service. Activision Blizzard CEO Bobby Kotick also commented on the deal, saying that he approves of the deal, but that "nothing substantially changes with the addition of this divestiture" for Activision Blizzard and its investors.
The current deadline for Microsoft's Activision Blizzard acquisition is October 18.

Gaming

Microsoft’s Activision Blizzard acquisition is going to take even longer

inarius diablo 4

Microsoft and Activision Blizzard have agreed to extend the deadline for its impending merger. The companies now have until October 18 to close the deal, extending their original deadline by months.

The original cutoff for Microsoft's Activision Blizzard buyout was July 18, however, that finish line wasn't an easy one to cross. Just before that date, Microsoft had to face off against the FTC in a court case to decide the deal's fate. A San Francisco judge ruled in Microsoft's favor with only days to go before the July date. With a few other loose ends to tie up, Microsoft now has until mid-October to get it done.

Gaming

Microsoft beat the FTC. Here’s what the controversial court ruling means for Xbox

You’ve probably heard that the Federal Trade Commission (FTC) lost its case against Microsoft after an exciting and revelatory trial. On Tuesday, Judge Jacqueline Scott Corley denied FTC's motion for a preliminary injunction to block Microsoft’s acquisition of Activision Blizzard before its potential completion by July 18. Ultimately, Corley did not believe that Microsoft owning Call of Duty would “substantially lessen competition” in the game industry. It was major win for Microsoft after months of regulatory hoops and roadblocks, but the FTC quickly moved to appeal the decision. This all raises an important question: What’s next?

Over the next week, Microsoft, Activision Blizzard, and the FTC will determine the fate of the gaming companies involved in this acquisition and set a precedent for the future of the game industry. On top of that, Microsoft still has to deal with the next moves made by the U.K.'s Competition and Markets Authority (CMA), which wants to block the acquisition due to its impact on cloud gaming. Following the release of Judge Corley’s Preliminary Injunction Opinion, I spoke to two analysts and a lawyer with knowledge of the video game industry to better understand what lies ahead for Microsoft and Activision, the FTC, and the CMA. The battle isn't quite over yet, even if the end is finally on the horizon.
What’s next for Microsoft and Activision Blizzard
Currently, Microsoft and Activision are in a solid position, as a Judge has ruled that Microsoft is unlikely to pull Call of Duty from PlayStation or lessen competition in the game console, cloud gaming, or game subscription markets by acquiring Activision Blizzard. There’s a temporary restraining order in place until July 14, which the FTC hopes to successfully appeal during. As soon as that order is up, though, Microsoft and Activision Blizzard have until July 18 to complete the acquisition.