Xbox is a disaster
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- Asha Sharma, the new Xbox CEO, warned of a "reset" at Microsoft's gaming division just three days after Summer Game Fest, saying it would require "making hard choices," with layoffs expected to start the following week
- Microsoft's gaming memo revealed the company spent over $20 billion on content, platform, and hardware subsidy over five years (excluding Activision Blizzard King) while annual revenue declined nearly half a billion dollars in that period
- Game Pass plateaued at roughly 30 million subscribers, far short of Microsoft's goal of 100 million by 2030, undermining the subscription strategy that drove Microsoft's costly studio acquisitions
- Microsoft is reportedly considering closing at least five studios, with Ninja Theory, Arkane (Dishonored), and Double Fine (Psychonauts) named as potentially on the chopping block, per colleague Tom Warren's reporting
- Phil Spencer retired in February and Sarah Bond left the company, clearing out the leadership that oversaw the Game Pass push and the $68.7 billion Activision deal
- Matthew Ball is Xbox's new strategy officer and discussed the next console, codenamed Project Helix, in an interview with The Game Business
- Sharma scrapped the unpopular Microsoft Gaming branding in favor of just Xbox, restyled the logo as XBOX, and moved away from controversial AI features, though console exclusivity strategy remains unclear per Booty's comments to Game Informer
Why it matters: Microsoft spent $20 billion on gaming investments over five years while revenue fell $500 million — a loss-making strategy that now triggers layoffs at storied studios like Arkane and Double Fine. With Game Pass stuck at 30 million subscribers and a $68.7 billion Activision deal still to recoup, the bill for Xbox's failed subscription-first bet is being paid by the developers and teams who had no say in those decisions.
