Microsoft Layoffs Could Mean More Than You Realized

Nearly two years to the day that Microsoft first announced its intention to acquire Activision Blizzard, the gaming giant has made another shocking announcement. This time, not only are nearly two thousand people out of work, but gamers may be looking at a very different retail landscape in the near future. On Thursday, The Verge broke the news that Microsoft had instituted mass layoffs across its gaming divisions. All told, somewhere around 1,900 employees have been let go from the company, with impacted teams including ZeniMax Media, Activision Blizzard, and other areas of Xbox operations. As news of the layoffs began to spread like wildfire on social media, Microsoft employees everywhere suddenly became uncertain of their standing with the company. Bloomberg's Jason Schreier reported that Xbox employees had begun messaging him to find out if he knew who would be staying and who would be cut from their teams.

These Xbox layoffs are such a mess that staff across Activision Blizzard are texting *me* to try to find out if they might be impacted. Nearly 2,000 job cuts and people now just have to wait around to see if they're part of the bloodbath

— Jason Schreier (@jasonschreier) January 25, 2024

What's more, according to sources who have communicated with Windows Central Managing Editor Jez Corden, these cuts might have fully eliminated teams that typically handle the release of hard copy games. Corden shared his findings on X (formerly Twitter), writing, that the layoffs "shut down departments dedicated to bringing Xbox games to physical retail ... which if you've seen the digital-only Xbox console leaks ... well, you can get an idea of where Microsoft is going here."

Microsoft has also shut down departments dedicated to bringing Xbox games to physical retail ... which if you've seen the digital-only Xbox console leaks ... well, you can get an idea of where Microsoft is going here.

— Jez (@JezCorden) January 25, 2024

Corden is, of course, referring to the recent rumors surrounding Xbox's alleged plans to go the all-digital route with future consoles. During Microsoft's court battle with the FTC last year, fans got access to leaked documents detailing the company's plans to release a new version of the Xbox Series X console. This new system, codenamed "Brooklin," promised to give gamers "deliver 4K Gen9 console gaming with more internal storage, faster WiFi, reduced power, a more immersive controller," and 2TB of storage, but with a major caveat: The Brooklin console is also designed without a disc drive.

Adding fuel to the fire are recent reports of closeouts on physical media and major releases going digital-only. Best Buy has recently phased out physical copies of movies in its stores, signaling a possible sea change in the home entertainment industry. Additionally, "Senua's Saga: Hellblade" was recently announced to be a digital-only release, following the launch strategy of a surprise hit from last year, "Alan Wake 2."

In response to Jez Corden's reports on X, industry analyst Daniel Ahmad writes, "There are certain AAA games with 80%+ digital shares on Xbox these days so it's not too surprising. Indicative of how next gen will be for sure." In other words, Microsoft will continue to follow the money — and when it comes to video game sales, the company is seeing a good bit of success on the digital front. With PlayStation's latest console refresh also experimenting with the idea of making a disc drive into an optional accessory, we could be seeing the video game industry slowly inch away from physical media in real time.

Even with so many signs pointing towards an all-digital landscape for future Xbox projects, Jez Corden also cautions against panicking over this report — at least not yet. "Note: reducing retail teams doesn't confirm Microsoft is quitting physical retail for Xbox games yet, they can outsource, and might be consolidating here," Corden writes. Still, Corden notes that it looks like the gaming industry might be heading in that direction in the near future. We'll be sure to keep readers up-to-date as this story develops. As of this writing, Microsoft has not yet made any statements regarding its plans for disc-based games as a whole, and it's likely that the company will want to wait until the dust settles after these layoffs to make any further game-changing announcements.

Note: reducing retail teams doesn't confirm Microsoft is quitting physical retail for Xbox games yet, they can outsource, and might be consolidating here. So, don't run with "Xbox is quitting physical" based on this.

But, it does seem to be the industry trajectory. Writing is on...

— Jez (@JezCorden) January 25, 2024

Other departments related to customer satisfaction were reportedly impacted by these layoffs, as well. Corden explains, "Multiple sources tell me that Microsoft is laying off the entire internal customer support team(s) for [Activision Blizzard King] games, save a few. [Microsoft] will outsource the rest to external companies abroad." He added, "A huge amount of community managers have also lost their jobs across the company. Less community building for Xbox games in Microsoft's future it seems like."

It remains to be seen how this might negatively impact the customer experience for major franchises like "Warcraft" or "Call of Duty," but fans are already bracing themselves for more changes. In the meantime, former Microsoft employees are rallying together on social media to share their stories and hunt for new jobs.