Xbox is Planning Major Layoffs in Company "Reset" After Being "Over Extended"
According to an internal employee email from Xbox CEO Asha Sharma obtained by Bloomberg, the company's revenue has declined by "nearly half a billion" dollars during the past five years, while spending over $20 billion.
Xbox CEO, Asha Sharma
Xbox is reportedly preparing for another major round of cuts as Microsoft’s gaming division enters a new era under CEO Asha Sharma.
According to a new Bloomberg report, Xbox is planning significant layoffs that are expected to take place shortly after Microsoft closes its fiscal year on June 30. The exact scale of the reported layoffs is not yet clear, but Bloomberg’s sources said Xbox is also planning to significantly reduce marketing budgets and spending in some other areas of the business. Xbox declined to comment to Bloomberg.
Xbox has not publicly confirmed layoffs, but shortly after Bloomberg’s report, Xbox Wire published the internal memo sent to employees, outlining what Asha Sharma and Matt Booty described as the “next 100 days” of an Xbox reset.
The memo also offers a more detailed snapshot of Xbox’s recent performance. Sharma and Booty wrote that Game Pass had seen more than eight months of decline before the team began “fixing” the offering, and that the service has now started to grow again. They also said Xbox’s platform teams shipped more updates in the last 100 days than during the previous year combined. Additionally, they point to a "hardware component crisis" being a major factor as well.
If layoffs do happen, this would represent the first major restructuring move under Sharma, who became CEO of the brand in February after Phil Spencer retired from the company. Sharma took over at a difficult moment for Xbox, following years of uneven first-party output, slowing hardware sales, significant losses and pressure around Game Pass growth, studio closures, canceled projects, and a shifting platform strategy that has moved several former Xbox exclusives onto PlayStation and Nintendo platforms.
Xbox also just underwent a large wave of layoffs less than one year ago, not to mention in 2024 before that, and in 2023 before that.
Sharma has been quick to build goodwill among the gaming community, though in her first few months. She walked back plans for Copilot AI features on Xbox, lowered Game Pass subscription prices, and gave away free collector's edition Xbox consoles just this past weekend at Summer Game Fest. After recent price changes, Game Pass is reportedly starting to "grow again."
According to the reportedly leaked memo, revenue is severely down and costs are up, achieving only a fraction of the previously reported goal "accountability margin" of 30%. Sharma states the company has spent over $20 billion on ongoing content investments, but annual revenue has declined by nearly $500 million during the last five-year period.
Sharma is taking a firm stance on wanting better results.
“Going forward, this cannot continue...We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming, and devices. In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content...We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win.
My mandate is not a 30% accountability margin. It’s not enterprise software margins. It’s to be the number one gaming and entertainment company.”
- Xbox CEO, Asha Sharma, according to Bloomberg
In the lead-up to Project Helix, it sounds like Xbox could be doubling down on a more curated strategy of preserving exclusives and pushing their platform as a destination for gamers, not just an option among many.
For example, upcoming games like Gears of War E-Day and Clockwork Revolution will not be coming to PlayStation 5.
Subscribe to 80 Level Newsletters
Latest news, hand-picked articles, and updates
Don't forget to subscribe to our Newsletter, join our 80 Level Talent platform, follow us on Twitter, LinkedIn, Telegram, and Instagram, where we share breakdowns, the latest news, awesome artworks, and more.
Are you a fan of what we do here at 80 Level? Then make sure to set us as a Preferred Source on Google to see more of our content in your feed
