Microsoft’s shock gaming layoffs have reportedly hit the Activision Blizzard teams behind mobile games Call of Duty Warzone Mobile and Warcraft Rumble.
Yesterday, Xbox boss Phil Spencer sent a memo to staff, verified by IGN, that outlined a further 650 layoffs at Microsoft’s gaming business. These layoffs follow the 1,900 made earlier this year, and bring the total up to an eye-watering 2,550 since Microsoft’s $69 billion acquisition of Activision Blizzard last year.
While Spencer insisted no games were canceled or studios closed this time, Game File reports that Activision Blizzard’s development teams for Call of Duty Warzone Mobile and Warcraft Rumble were hit.
Call of Duty Warzone Mobile launched in March on iOS and Android as a Warzone-specific Call of Duty mobile experience that offers battle royale for up to 120 players, as well as cross-progression with the PC and console Warzone, Modern Warfare 2 and 3, and the upcoming Black Ops 6. IGN’s Call of Duty Warzone Mobile review returned an 8/10. We said: “Call of Duty: Warzone Mobile includes all the best elements of Warzone, while speeding up and streamlining matches and using cross-progression to make this a meaningful extension of the traditional experience.”
Activision’s hope was that Warzone Mobile would make a splash in the competitive mobile shooter market, where the hugely successful Call of Duty Mobile, developed by Tencent-owned TiMi Studio Group, is already established. With Call of Duty Mobile, which has seen 650 million downloads since launch, revenue is shared between Activision and Tencent. Call of Duty Warzone Mobile, on the other hand, is developed entirely in-house at Activision, and so the company gets a bigger slice of the money pie every time a player drops cash on a battle pass or a cosmetic.
It sounds like Call of Duty Warzone Mobile hasn’t met Activision’s expectations, however. Game File’s Stephen Totilo said that Warzone Mobile “didn’t hit as big as hoped,” and that while it will remain online, its team “is being scaled down.”
Spencer referenced Warzone Mobile’s struggle in his memo, without namechecking the game itself: “Separately, as part of running the business, there are some impacts to other teams as they adapt to shifting priorities and manage the lifecycle and performance of games.”
Similarly, Blizzard’s Warcraft Rumble team is affected by the layoffs. Warcraft Rumble launched as a free-to-play mobile tower defense game in 2023 across iOS and Android and while it started strong, interest appears to have tailed off. Warcraft Rumble is now moving from launch to post-launch live ops, but will remain online.
Activision Blizzard’s recent mobile struggles call into question Microsoft’s acquisition of the company itself, given Spencer has made no secret that the decision to buy the company was in part motivated by Xbox’s lofty mobile ambitions (Activision Blizzard owns King, the maker of phenomenally popular mobile game Candy Crush). Indeed, Microsoft plans to launch an app store of its own, taking on Apple and Google in the lucrative mobile game space.
Xbox hardware sales were way down again in Microsoft’s Q4, the latest financial quarter we have figures for, while gaming content sales skyrocketed again thanks to Activision Blizzard. Gaming revenue overall appears to be doing more than fine in terms of year-on-year comparisons, even setting quarterly records, but this was largely due to the boost offered by Activision Blizzard (it wasn’t there to make money for the company last year, now it is, so the numbers have gone up).
Gaming revenue was up 44% year-over-year, but with 48 points of net impact from the acquisition, which indicates that Xbox’s not-Activision Blizzard-related business isn’t doing as well as it was last year. Xbox content and services revenue fared better, up 61% year-over-year, with 58 points of net impact from the acquisition.
Overall, Microsoft’s More Personal Computing division (which includes Xbox as well as other segments such as Windows) brought in $15.9 billion in revenue, up 14% year-over-year, during Q4.
Speaking in August, Spencer said that Xbox’s controversial multiplatform push is in part about bringing in more money to Microsoft’s gaming business — with the pressure now on to deliver following Microsoft’s acquisition of Call of Duty maker Activision Blizzard.
“And we run a business,” Spencer said. “It’s definitely true inside of Microsoft the bar is high for us in terms of the delivery we have to give back to the company. Because we get a level of support from the company that’s just amazing and what we’re able to go do.
“So I look at this, how can we make our games as strong as possible? Our platform continues to grow, on console, on PC, and on cloud. It’s just going to be a strategy that works for us.”
Microsoft is set to launch Activision’s Call of Duty: Black Ops 6 in October as the first mainline Call of Duty game to hit its Game Pass subscription service day-one. It is heavily rumored to be preparing an Xbox handheld for release, and has announced plans to release next-gen Xbox consoles. Indiana Jones and the Great Circle launches on PC and Xbox this December, with a PS5 release set to follow soon after.
Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
