Microsoft is cutting close to 2,000 people in its video game producing division. Following its acquisition of Blizzard and Activision in 2023, Microsoft has become one of the largest players in the gaming industry.
Video game development has become more expensive and more time consuming, threatening proper operations. Microsoft saw that one game had taken 8 years to develop and was still nowhere finished, so axed it. Bloomberg says:
Video-game maker Blizzard Entertainment canceled one of its biggest projects on Thursday as part of a reorganization under new owner Microsoft Corp. that led to mass layoffs of 1,900 people, or 8% of the gaming division’s total staff. The cancelation of the game, codenamed Odyssey, left Blizzard employees reeling as some lost their jobs and others were left wondering about the future of the studio.
Microsoft announced the news in an email to employees early Thursday morning, and many members of the Odyssey team were subsequently informed that they were being let go. The news arrived three months after Microsoft closed the $69 billion acquisition of Activision Blizzard in the largest video-game deal in history.
Technology has improved so much in 8 years that the game itself could not have been properly finished without cost overruns. This is a problem commonly seen in the defense industry, where projects take several decades to complete. Meanwhile, new technology such as small drones, has leapfrogged expensive ones like the F-35 in terms of utility. The Verge continues:
The layoffs come the same month Riot Games, Google, Discord, Twitch, Unity, eBay, and others announced cuts.
Microsoft completed its $68.7 billion acquisition of Activision Blizzard in October, following 20 months of battles with regulators in the UK and US. Former Activision Blizzard CEO Bobby Kotick stepped down at the end of December, with Microsoft not appointing a direct replacement. Instead, a suite of Activision Blizzard executives now report up to Matt Booty.
Money is increasingly tight with high interest rates, meaning companies will take close looks at underperforming projects. The American economy is in for a shock following all these layoffs, and could be the sign of a tough year.
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