Xbox head Asha Sharma said the growth strategy for Game Pass failed to meet expectations and the service was in decline when she took over.

This admission signals a major pivot for Microsoft's gaming division after years of aggressive expansion. The failure to hit growth targets has forced the company to implement a brand reset and drastic cost-cutting measures to stabilize the business.

In an interview with Bloomberg, Sharma said there was a gap between internal goals and reality. Microsoft expected Game Pass to have 77 million subscribers by 2026 [1]. However, the service reportedly only has about 30 million users [2], which is less than half of the original target.

Internal data suggests the company's pricing strategy contributed to the decline. Microsoft said a price hike drove away millions of subscribers [3]. To stop the loss of users, the company subsequently dropped the price of the service [4].

Beyond pricing changes, the strategic failure has resulted in significant workforce reductions. As part of the brand reset, approximately 3,200 Xbox positions were fired [5].

Sharma said the reset is necessary to align the service with actual market demand rather than previous internal projections. The shift follows a period of volatility where the company attempted to scale the subscription model rapidly across different platforms.

“Microsoft expected Game Pass to have 77 million subscribers by 2026.”

The gap between Microsoft's projected 77 million subscribers and the actual 30 million suggests a fundamental miscalculation of the subscription market's ceiling. By cutting thousands of jobs and slashing prices, Microsoft is moving away from an aggressive growth-at-all-costs model toward a more sustainable, lean operational structure to prevent further subscriber attrition.