Asha Sharma, the new CEO of Xbox, issued an internal memo outlining a major corporate "reset" for the Microsoft Gaming division [1].
The move signals a shift in strategy for one of the world's largest gaming ecosystems. As Microsoft faces financial pressure, these changes may alter how millions of users access games and how the company manages its internal development studios.
The reset comes after the division experienced four consecutive quarters of revenue decline [3]. Sharma said the plan includes rebranding the Microsoft Gaming division simply as Xbox [5]. The CEO also detailed a plan to cut prices for the Game Pass subscription service to attract more users [2].
Beyond pricing and branding, the memo warns of more severe structural changes. Sharma said the company is preparing for significant layoffs [6]. Analysts suggest the reset could lead to the shutdown of various Xbox game studios to reduce overhead [2].
To diversify revenue streams, Sharma is considering the introduction of ad-supported subscription models [2]. This would allow users to access services at a lower cost in exchange for viewing advertisements. Additionally, Microsoft confirmed that the new chief has already scrapped a controversial advertising campaign as part of this transition [4].
The memo was released in summer 2024, shortly after the company's summer showcase [1]. The strategic pivot is centered at Microsoft's Redmond campus, where the leadership team is tasked with reversing the recent downward financial trend [1, 4].
“Asha Sharma, the new CEO of Xbox, has issued an internal memo outlining a major corporate "reset".”
This reset indicates that Microsoft is moving away from an aggressive acquisition-and-growth phase toward a period of austerity and efficiency. By considering ad-supported tiers and studio closures, Xbox is prioritizing immediate revenue stabilization over the long-term expansion of its first-party content library.
