Activision Blizzard’s Future Shaky After Xbox Buyout: ‘They’re at a Point of Real Crisis’

A year after the Xbox and Activision Blizzard buyout, things seem to have taken a turn for the worse for the Diablo and COD developers. Following the acquisition, around 1,900 employees were immediately laid off. Then, 400 employees, primarily workers in California and the mobile division, were axed in September 2024. However, this effort, the so-called effort to eliminate redundancies and streamline operations, seems to have yielded no results.

Instead, there was a ‘big exodus’ of studio founders and talents. Blizzard’s president, Mike Ybarra, and chief design officer, Allen Adham, left the company after the acquisition. It also led to the cancellation of Tony Hawk’s COD and a survival game that was in development for 6 long years.

“Nobody really knows what Xbox‘s plan for the next few years is,” said Bloomberg journalist Jason Schreier. Schreier himself is widely known as a prolific insider in the industry. Recently, he released a book titled Play Nice: The Rise, Fall, and Future Of Blizzard Entertainment. A part of it details what went right — and horribly wrong — about the merger. According to him during an interview, Activision Blizzard, under Xbox‘s leadership, is now at ‘a point of real crisis’ because of the massive talent drain.

“They’re at a point of real crisis, and we’ve reported at Bloomberg, and a lot of people have kind of seen the obvious,” said Schreier.

In October 2023, Microsoft and Xbox closed the deal by cashing out $75 billion for the Activision Blizzard buyout. But, by spending such a large capital, Microsoft expects Xbox to be able to produce even larger profits.

“Ironically, as a result of making this purchase, of Activision Blizzard, Xbox is feeling a lot more pressure from its corporate parents, Microsoft, and therefore it is having to show more profits and cut costs,” added the former Kotaku writer.

If asked a year ago, Schreier admits that he, and many others in Activision Blizzard, were extremely optimistic about the Xbox buyout.

“Phil Spencer was flying around, and he came to Blizzard’s campus, and people were lining up to say hi to him and take selfies with him,” reminisced Schreier in the interview. Then what sealed the deal for the developers was Spencer’s excitement about the projects– games that they were working on.

“[…] He came in and people had prepared, like, these PowerPoint presentations to show to him. And he was like, ‘No. I wanna see the games. I wanna play the games,'” Schreier adds. “[He] seemed, like, this, like, benevolent leader who was coming in to, like, save them from Bobby Kotick and his regime.”

During his 32-year-long tenure, former Activision Blizzard CEO Bobby Kotick was always seen as a cold, ruthless capitalist. Many players felt that Kotick’s focus on monetization and profit negatively impacted the quality of games. From the developers’ side, they felt unionization efforts were made difficult and a gender-discriminating culture was fostered. Being freed from his shackles was liberating, to say the least.

Unfortunately, it doesn’t take long for Spencer to face reality and do it in the worst way possible.

“And then 3 months after that, Phil Spencer sent out an email that sounded like a Bobby Kotick email. Sounded like any corporate, like, executive email saying, ‘because of market realities, we have to reshift’ […] and essentially cut the jobs of 1,900 people, including many at Blizzard, and it was just devastating for people,” said Schreier. “[…] So it feels like […] this savior in Microsoft has turned out to just be another, like, frigging unstable corporate parent.”

But Activision Blizzard’s misery might not stop there as Xbox has been busy chopping heads despite its acquisition spree over the years. Parts of ZeniMax — Tango Gameworks, Arkane Austin, Alpha Dog Games, and Roundhouse Studios — were also among its victims.

“I think even at the top of Xbox they don’t exactly sure what they’re going to do for the next couple of years,” Schreier added. “And where [Activision] Blizzard fits into that? I don’t know.”