Almost 2,000 employees in Microsoft's gaming division will be laid off following the $69 billion (£54.3 billion) acquisition agreement, the BBC reported.
According to an internal email from Xbox CEO Phil Spencer, the business intends to lay off 1,900 of its 22,000 employees.
It was issued three months after the software company purchased Activision-Blizzard, which is famed for the Call of Duty and Warcraft franchises.
Spencer states in the letter, which Microsoft has verified as authentic, that losing colleagues was a "painful decision."
The note, first reported by tech website The Verge, reveals that employees in the Xbox division as well as those at publisher Zenimax, which handles companies such as Bethesda and Arkane, may be affected.
BBC Newsbeat has approached Microsoft for information on how many people in each organization would be affected.
A second letter, also revealed by the Verge and authenticated by Microsoft, was delivered to Blizzard employees by Microsoft Studios head Matt Booty.
He stated that discussions with impacted employees would take place throughout the day, with personnel outside North America being notified later.
The statement also repeated Spencer's, stating that the corporation "would provide our full support, including severance benefits informed by local employment laws."
It also announced that work on a survival game project known as Odyssey had ceased.
The video game industry has already been hit by a string of layoffs this year, following a series of redundancy announcements in 2023.
This article was originally published on the BBC.