Microsoft announced on Thursday it will lay off 1,900 staff across its video-game divisions, including at Activision Blizzard, which it purchased for $69 billion in an acquisition that closed late last year.
The layoffs represent about 8% of the total workforce of Microsoft Gaming, which includes Xbox, Bethesda, and Activision Blizzard.
Most of the cuts will affect the latter, which has been struggling with declining revenues, lawsuits, and allegations of toxic workplace culture.
In an internal memo obtained by The Verge, Phil Spencer, the head of Microsoft Gaming, said the decision was made to align the strategy and cost structure of the gaming business with the best opportunities for growth.
“We will provide our full support to those who are impacted during the transition, including severance benefits informed by local employment laws,” Spencer wrote.
The move comes just three months after Microsoft completed its largest acquisition ever, buying Activision Blizzard for $69 billion in cash. The deal gave Microsoft access to some of the most popular franchises in the gaming industry, such as Call of Duty, World of Warcraft, and Candy Crush.
However, it also brought along a host of challenges and controversies, as Activision Blizzard faced multiple lawsuits from regulators, shareholders, and employees over its handling of sexual harassment, discrimination, and labor violations.
Microsoft said at the time of the acquisition that it would work with Activision Blizzard to address the issues and foster a more inclusive and respectful work environment.
The layoffs are because of increasing competition in the gaming industry and rising costs of development and marketing.
According to a report by Game Developer Magazine, more than 5,800 jobs were lost in the gaming sector in 2023, mostly due to studio closures, mergers, and acquisitions.
Microsoft, however, said that it will continue to invest in areas that will grow its gaming business and reach more players around the world.
“Looking ahead, we’ll continue to invest in areas that will grow our business and support our strategy of bringing more games to more players around the world,” added Spencer.