Microsoft’s Phil Spencer admits massive layoffs were due in part to gaming’s ‘lack of growth’


Ever since Microsoft announced a wave of layoffs that would affect 1,900 people – over 800 of whom work for Activision-Blizzard – the officially stated reason for why has changed a couple of times. An interview from Polygon has now brought a third excuse out of Microsoft, as CEO Phil Spencer now says that layoffs were also a result of reduced growth within the gaming industry.

According to Spencer, the cost of making a video game has ballooned, requiring $300 million to make one title by his estimation, which he argues is causing publishers to grow more risk-averse to new IPs and ideas. Spencer also claims that consoles haven’t grown this past year, resulting in an industry-wide shrinking and the subsequent layoffs that have spread across game dev; Microsoft is effectively following the trends of business.

“I’ll say the thing that has me most concerned for the industry is the lack of growth. And when you have an industry that is projected to be smaller next year in terms of players and dollars, and you get a lot of publicly traded companies that are in the industry that have to show their investors growth — because why else does somebody own a share of someone’s stock if it’s not going to grow? — the side of the business that then gets scrutinized is the cost side.

“We’re a business. I’ve said over and over. I don’t get any luxury of not having to run a profitable growing business inside of Microsoft. And we are that today. […] But to your question, for us as Xbox or any of the teams that are out there, it is really an outcome of an industry that’s not growing.”

As referenced earlier, Microsoft has said that the layoffs were a result of overlap, then said that firings were already planned by ActiBlizz before it was acquired by the company, so now this added reason is already muddying murky rationale that is being scrutinized by the FTC. We also should point out that the earlier referenced publisher aversion appears to be primarily focused on Xbox in specific, which is perhaps another crutch for Phil to lean on.

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