Raven Software in Middleton has been caught up in the latest mass layoffs to hit the video game industry, after Microsoft let go of hundreds of employees in its gaming division in early July.
Microsoft laid off over 9,000 employees companywide July 2. A leaked email from Microsoft Gaming CEO Phil Spencer — provided to Windows Central — confirmed hundreds of layoffs in the gaming division specifically. Spencer celebrated the company’s successes in the leaked email announcing layoffs, claiming that Microsoft had, “more players, games, and gaming hours than ever before.”
Microsoft did not reply to a WPR request for a comment or interview.
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Alongside these layoffs, Microsoft also cancelled several video game projects in development for years across its gaming division.
Raven Software was founded in Middleton in 1990 and has primarily served as a studio working on the Call of Duty video game franchise in recent years. It was purchased by Activision in 1997. Activision was purchased by Microsoft as part of a larger deal with World of Warcraft developer Blizzard and Candy Crush developer King that closed in 2023 and cost Microsoft $69 billion.
Bloomberg reporter Jason Schreier first reported on the layoffs and confirmed to WPR that “less than 20” staffers were laid off at Raven Software. He told WPR’s “Wisconsin Today” that while other studios faced steeper cuts, questions remain about why there were any job cuts at Raven Software at all.
“The most recent Call of Duty was breaking records. There’s a new one coming this fall. This is not a series that is shrinking or failing to produce profits,” Schreier said. “So it definitely seems a little bit questionable that even the Call of Duty studios — as opposed to the subsidiaries of Microsoft that haven’t produced quite as much — are getting hit.”
July layoffs are latest chapter in years of video game industry turmoil
Mass layoffs aren’t new to Microsoft or the video game industry at large in recent years.
Microsoft’s gaming division Xbox alone has seen four mass layoffs since January 2023, according to Bloomberg. The company laid off 1,900 employees at Activision Blizzard and Xbox in January 2024 and an additional 650 Xbox employees last September, according to The Verge.
Schreier said layoffs at Xbox come from a confluence of different factors, including an urge to see a more immediate return on investment following spending tens of billions of dollars to acquire several video game developers, including the owner of Raven Software.
“At the same time, we’re seeing a lot of industry-shaking events surrounding the tech industry and the entertainment industry. Gaming growth has really plateaued in a lot of areas of the sector over the last couple of years,” Schreier said. “The introduction of (artificial intelligence) as a large part of Microsoft’s future business model has also played a role in restructuring and cutting costs in other areas of the business.”
The gaming industry at large has had more than 22,000 jobs eliminated from 2022 through March 2024, according to estimates in the journal Games: Research and Practice.
Schreier said layoffs and instability across the video game industry ties to a drop in growth in recent years compared to performance during the COVID-19 pandemic, as well as a larger pool of people applying for fewer jobs in the video game industry.
“I’ve heard all sorts of horror stories about junior roles just getting filled by people with 10, 15, 20 years of experience. Whereas people who are just trying to enter the video game industry or only have a couple of years behind their belt are just unable to find any work,” Schreier said. “It’s really grim.”
Video game publisher in Green Bay said he sees burgeoning industry in Wisconsin
Despite recent turmoil within the video game industry, a video game publisher in Wisconsin said he sees an opportunity for the state to become a hub for video game development.
Ben Kvalo is the CEO of Midwest Games, a video game publisher based in Green Bay. He told “Wisconsin Today” he opened a video game publishing company in Green Bay after mapping the location of game publishers nationwide — and seeing a gap in the middle of the country.
“We saw Green Bay and Wisconsin as a whole as a real opportunity, both from a cost perspective — it’s vastly cheaper than where 62 percent of the industry is (in) California, Washington and Texas … and with talent,” Kvalo said. “If we can create pathways back, we (can) have a burgeoning video game development and industry right here in the state of Wisconsin.”
Kvalo is also the president of the Wisconsin Games Alliance, a group that promotes video game development in Wisconsin. Kvalo said the alliance works to raise awareness for game development already in the state and improve networking within the state’s video game industry.
“That is what happens a ton in California. That’s why California is the way it is in San Francisco and LA,” Kvalo said. “We need more of those collaboration moments.”
Kvalo testified before the Wisconsin Assembly advocating for bill AB 204 in May. The legislation would create a tax credit for video game producers that’s equal to 30 percent of the wages paid to Wisconsin employees. He said the tax credit could help Wisconsin take advantage of video game companies looking to move video game production to cheaper areas of the country.
“If this tax incentive goes through, I know companies that are based in Texas, California and Washington that will move either segments of their company or build brand new segments of their company in Wisconsin,” Kvalo said.
“We’re in a unique moment post-COVID where suddenly these companies … they are all looking to be more efficient in how they operate and look at new places because of where they’re currently located,” Kvalo continued. “If this tax legislation goes through, we will become a mega-hub globally for video games.”
