Xbox launches 100-day reset to curb rising hardware costs

Xbox executives Asha and Matt sent a 100-day reset memo to employees worldwide outlining a new phase of work to confront rising console component prices, reassess studio spending, cut reliance on outside vendors and rebuild platform systems to speed delivery.

The message reviewed progress in the first 100 days: platform teams shipped more updates in that period than in the prior year combined, Game Pass began to grow again after more than eight months of decline, fan engagement rose around the Xbox Games Showcase and the return of FanFest, and the company reintroduced exclusives including Gears of War: E-Day (2026) and Clockwork Revolution (2027). The memo also noted the launch of a Player Voice channel to gather feedback from players, creators and developers.

Executives laid out five realities the business must address. The memo states Xbox reaches more than 1 billion players annually who log about 72 billion hours across console, PC, mobile and streaming. It warned the company faces strong competition for consumer attention from other games and entertainment formats.

On finances, the division expects to close the fiscal year at roughly a 3% accountability margin, down from the prior year. Excluding Activision Blizzard King, Microsoft group spending on content, platform and hardware subsidies exceeded $20 billion over the past five years while annual revenue fell by about $500 million over the same period.

The memo described a hardware component crisis. It said the price paid for console storage components was more than twice the level paid last fall when the current CEO joined in February, and those costs have since doubled again. The company expects further increases into the 2027 holiday season that would put prices at more than five times the level of two years earlier, with memory costs rising on a similar path. The note said Xbox cannot produce as many consoles as demand requires and needs a new hardware business model and partnerships while remaining committed to the Helix platform.

On studios, executives said the studio system grew to supply content for subscriptions, streaming and multiple devices and has become overextended. The memo stated the company has not adequately funded major franchises to compete at the highest levels and needs to rebalance investment between first- and third-party exclusives and prioritize spending across the next five years.

Regarding platform infrastructure, the memo described current systems as overly complex, spanning hundreds of dependencies and relying heavily on vendors. Executives called for greater in-house engineering capability, simplification of systems and shorter time to ship value to players. Planned actions include evolving and rebuilding the technology stack, strengthening internal engineering, exploring mergers and acquisitions to support hardware, PC, mobile and streaming efforts, and rebalancing content investment to maintain a pipeline of exclusives and new IP.

The memo included direct language about the company’s direction. It reads, “Over the first 100 days together, we have started to revive XBOX.” The note also acknowledged errors: “We have made mistakes, and will continue to make them, but what matters is that we listen, learn, and adjust the course where needed.” It closed with a call to action: “Let’s reset for a stronger XBOX and build the #1 gaming and entertainment company.”

Executives warned some of the realities may be surprising or frustrating for employees and said the company will pursue a sprint-style approach to make progress on hardware, content, experience and services over the next 100 days.