Microsoft lays off more gaming staff in new cuts

Xbox owner Microsoft is to cut about 650 staff from its gaming division in a new round of job losses after its $69bn (£54.3bn) merger deal.

The software giant said staff working in "mostly corporate and supporting functions" worldwide would be affected.

It laid off 1,900 staff in January and, in May, closed four studios bought before its purchase of Call of Duty maker Activision-Blizzard.

In a memo to workers shared online and verified by the BBC, Xbox boss Phil Spencer said "no games, devices or experiences are being cancelled and no studios are being closed" due to the latest layoffs.

Microsoft's purchase of Activision-Blizzard in October also included Candy Crush maker King and followed its buyout of Zenimax, which owns Fallout maker Bethesda.

Mr Spencer told staff Microsoft had tried to "minimise disruption" as it brought in new teams in the months since the multibillion-dollar acquisition.

He said the decision to cut more jobs - about 3% of its gaming staff - was made "as part of aligning our post-acquisition team structure" and organising the business "for long-term success".

Although he said games and studios would not be affected he said there would be "some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games".

Mr Spencer acknowledged the news would be "difficult" for workers and thanked those affected for their contributions to the company.

The games industry has been hit by mass layoffs over the past two years following a rush of investments and acquisitions amid record profits and player numbers during the Covid-19 pandemic.

PlayStation maker Sony, League of Legends creator Riot Games and Fortnite owner Epic have been among those to lay off hundreds of workers.

Microsoft received particular criticism over the closures of critically acclaimed studios Arkane Austin and Tango Gameworks earlier this year.

Xbox boss Mr Spencer told gaming website IGN he was expected to run a "sustainable" gaming business and show growth during a June interview.

And speaking during an official Xbox stream at Gamescom last month, he said the was "a high bar" inside Microsoft for the company's gaming division.

In its latest finance report Microsoft said its gaming revenues had increased, mostly due to its ownership of Activision-Blizzard, which also produces World of Warcraft, Diablo and Overwatch.

Sales of Xbox hardware have fallen since last year though, and the company has been trying to expand its software sales.