2023 and 2024 have been tumultuous, heartbreaking years for the gaming industry. After receiving a huge boon of funding during COVID, around 23,000 people have been laid off industry-wide in the last two years. Around 10% of those layoffs—2,500 people—were from Microsoft’s gaming division. And yet, that pain is not being felt at the top.
NBC reporters spotted, via a proxy filing, that Microsoft CEO Satya Nadella’s salary went up $30 million in the 2024 fiscal year, which ended June 30, 2024. Most of this increase is due to a massive jump in the amount of company stock Nadella was awarded. Wildly, Nadella even took a $5.5 million pay cut because of a security breach in 2023. The other powers that be at Microsoft wanted his $79.1 million annual salary to be bigger.
Where else could that money have gone to? I could think of around 2,500 former employees of Microsoft’s gaming division who might have some ideas.
Xbox’s no good, terrible, very bad year
Nadella taking a $30 million pay raise for the fiscal year which started in July 2023 and ended in June 2024 is very significant because it’s in this exact period that Microsoft acquired Activision Blizzard for a jaw-dropping $69 billion.
The acquisition was completed in October 2023. In January 2024, Microsoft’s gaming division laid off 1,900 people. Mergers leading to layoffs are a well-chronicled phenomenon (just ask Adam Conover about it). But the massive layoffs in January were just the start of the carnage—wrought likely not only by the merger but by lackluster Xbox sales and a confounding lack of coherent strategy for the brand’s future.
Just a few months later, in May 2024, Xbox shuttered multiple small indie studios under the umbrella of Bethesda, another major studio they’d acquired. The most notable closures were Redfall developer Arkane Austin and Hi-Fi Rush developer Tango Gameworks. The closure of Tango, especially, caused outrage, as Hi-Fi Rush is a critically acclaimed, award-winning game that reportedly garnered 2 million players in just one month—a major feat for an indie game.
It’s the exact kind of game Xbox executives said they want the company to make. In fact, Microsoft’s president of game content and studios said in a town hall meeting the day after the company shuttered Tango, “We need smaller games that give us prestige and awards.” In other words, games like Hi-Fi Rush.
Happily, PUBG publisher Krafton was able to acquire Tango Gameworks from Microsoft, saving the studio. But it could afford to bring over only half of Tango’s 100 employees, and the other studios shuttered by Microsoft were not so lucky. In fact, Xbox laid off another 650 people in September, which Xbox head Phil Spencer directly admitted was because of the Activision Blizzard acquisition.
Why Nadella’s salary increase is a slap in the face
When you add up all the drama at Microsoft’s gaming division since January 2024, you arrive at a stark number: 2,500 people have lost their jobs this year alone. That’s not even considering the company-wide layoffs that happened in January 2023, which took 10,000 jobs. The second-biggest round of layoffs in Microsoft history, happening only six months before the fiscal year in which the CEO would enjoy his $30 million pay raise.
IGN noted that, at $79.1 million, Nadella’s salary is 408 times larger than the average Microsoft employee’s. Compare that to how, when Nintendo was floundering after the Wii U’s disappointing launch, then-CEO Satoru Iwada voluntarily cut his wage in half so that the company could avoid layoffs.
“If we reduce the number of employees for better short-term financial results, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world,” Iwada is reported to have said. The logic of this should be apparent, yet sadly, CEOs like Nadella are more common.
Unfortunately, the $30 million in stocks that Microsoft happened to find for Nadella in the 2024 fiscal year isn’t enough to save 12,500 jobs. It rounds out to only $2,400 a person. But even if those funds could’ve saved a few hundred jobs, wouldn’t that have been worth it? Why must the rich get richer while the rest of us not only get poorer but strive to stay ahead in a shrinking job market where massive acquisitions and layoffs mean the number of jobs offered is much smaller than the pool of people clamoring for employment?
It should be illegal.
Published: Oct 27, 2024 09:00 am