Phil Spencer Says Activision Layoffs Were Due To Lack Of Growth And Need For Profits

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Xbox head Phil Spencer says that the layoffs at Activision Blizzard were done due to both the state of the gaming industry as well as the need for Xbox to be profitable.

In an interview with Polygon, Spencer talked about the “lack of growth” within the gaming industry as well as Xbox making sure its fans can get all the games they want, wherever they want.

“It’s a little bit of both,” Spencer told Polygon. “But 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. Because if you’re not going to grow the revenue side, then the cost side becomes challenged.”

On top of that lack of growth Spencer sees, he mentioned Xbox being a business first. With that comes the need to answer to shareholders and executives that require the company to be profitable.

“We’re a business,” he said. “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 just across the industry — you mentioned it, and in sitting here at GDC, I reflect on friends of mine in the industry that have been displaced and lost their jobs and how just, I don’t want this industry to be a place where people can’t, with confidence, build a career.

“So that’s why I keep pivoting back to: How does this industry get back to growth? 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. It can grow and it will grow again. But you see this time right now and the implications have human impact. And we should all reflect on that and think about it.”

Lastly, Spencer discussed Xbox as a brand and getting games in front of players. He reiterated past notions that it’s no longer about a single console connected to a TV for Xbox. The company’s research has shown that younger people just don’t view gaming like that due to the technology and applications — he mentioned TikTok specifically — they have access to at all times.

“So for Xbox, our brand pivot — as we attract and maintain relevance with a younger audience — is ‘Xbox is a place where I can find the great games I want to.’,” he said

What do you think of Phil Spencer’s comments on the Activision Blizzard layoffs and the state of gaming as a whole? For more Insider Gaming, read about what 2003 game could be getting a remake for the next Nintendo console.

  1. Peter Moore, Xbox boss 2003-2007:
    – “Xbox need exclusives. Halo 3 and Gears of War 2 will be only on Xbox 360”.
    – Result: everyone bought an Xbox 360. Console sold 3x better than previous Xbox

    Phil Spencer, Xbox boss 2014+:
    – “Everyone should play our games. Xbox games will be on PC. Nintendo and Playstation”
    – Result: nobody want Xbox, developers don’t release own games on Xbox

    Peter Moore was best Xbox boss ever

    1. And what games? The one’s already made by Activision/Blizzard and Bethesda that people were already getting before they were Pac-Man’d up by Microsofts keep away tactics? It’s not like Microsoft is making any of their actual properties that people literally scream at them for. Everything that’s coming out of their mouths since they started to even attempt to buy Activision has been complete nonsense.

  2. That is wrong though lol. PS3 outsold 360 anyway. So no everyone did not buy a xbox. And they do release the games on xbox still why make up lies? Exclusives are anti-consumer why defend it?

  3. Let us count some of the reasons why the industry is in the shitter:

    1. Live Service Games.
    2. MTXs in single-player games and the hypocrites who buy into them.
    3. Indie trash games that nobody will play, yet get center stage during presentations.
    4. Lack of good games in general.
    5. Greedy executives throwing fits when they’re not making more than $20 million+ per year and taking it out on their studios.
    6. Remakes of GoATed games that fail as remakes.

    It doesn’t take someone like Phil Spencer to point this out. How do we fix the industry? Look at the list above and reflect on the past. If games are too hard and too expensive to make these days, then maybe studios should downgrade the scope of their games or focus on researching technology that will make games more immersive. It’s amazing how no dev has figured out how to stop character clothing from clipping through things or how they can improve NPC A.I. to be something beyond just taking cover and shooting back.

  4. What? Phil needs to go I’ve been saying this since XB1 the guy is doing an awful job. They need more big acquisitions and an actual business plan fo they want to be a gaming subscription service or do they want to be a console manufacturer. Game Pass would be better if it was on all platforms.

  5. Phil Xbox needs more acquisitions that’s the problem you’re too slow!

  6. Phil wants to appeal to “GenZ” as a zoomer the only 2 things Xbox has that attracted people were Palworld and they own Minecraft. Y’all got no games actually make some good games and you’ll get an audience.

  7. You have no growth because you have no games and horrible marketing. Of all the people why weren’t the idiots like Aaron Greenberg laid off?

  8. So the Blizzard Layoffs sound like “drown the people on the boat because the ship is sinking.” Blizzard: A developer now under the Microsoft umbrella now who has one product that brings in something like 109mil a month in subscription revenue (an extremely rough estimate by someone who failed math, based on the recent news from GDC about WoW current sub numbers). But please, make sure those guys drown in the shallowest of puddles.

    Meanwhile, what game has Xbox/Microsoft really made lately that hasn’t come from an acquired developer? A company known for software is burning down because they’re putting all their eggs in the basket of hardware, but can’t figure out how to create or support software development, anymore? It makes absolutely no sense.

    I also don’t know why I’m having to be the most sensible business person in the room, across multiple industries (wrestling being the other one), when I’m not a businessman, but every merger/accusation comes with a lack of growth. You can’t expect a company to grow when it’s future is a giant question mark. They also come with.. get this.. layoffs. Happens in every industry! So Spencer just sort of proves.. I don’t even know what it proves. But it isn’t something smart. Nothing happening at Xbox seems smart right now. They sound like an extreme jumble, and if I were a shareholder I’d be absolutely pissed.

    You also can’t grow or profit when you’re products cost more, but people aren’t making enough to keep up with that, so they can’t buy it. It seems like common sense, but please, by all means, try to squeeze more blood from a stone. You don’t look insane and desperate doing that at all.

  9. Make better games, that’s how you grow the industry and profits. It’s like nobody is paying attention to what Larian did with Baldur’s Gate 3

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