Xbox outlines five priorities to reset business

In a memo published on Xbox Wire, Asha Sharma and Matt Booty set out five priorities they plan to address over the next 100 days to reset Xbox’s business and improve execution.

The memo states more than 1 billion players choose Xbox and its games each year, accounting for about 72 billion hours across console, PC, mobile and streaming. It describes attention as the central competitor, with more games, series, creators and content formats competing for players’ time.

On finances, the memo projects an accountability margin of about 3% at the end of the fiscal year, down year over year. It says that excluding Activision Blizzard King, Microsoft has spent more than $20 billion on content, platform development and hardware subsidies over the past five years while annual revenue declined by nearly $500 million. The memo states that such a combination of high spending and falling revenue “cannot continue.”

Hardware costs are a major concern. The memo reports console storage component prices were more than twice as high after Sharma became CEO in February, doubled again, and are expected to rise further by the 2027 holiday season to over five times the level of two years earlier. Memory costs have followed a similar pattern. “We are currently unable to make as many consoles as players want to buy,” the memo says, and it calls for a new hardware business model and partnerships while maintaining commitment to Project Helix.

The memo says Xbox expanded its studio system to supply content for subscription, streaming and devices and that expansion left the studio system overextended. It notes some long-running franchises have not received funding at the level needed to compete. The company plans to reassess investment priorities across first- and third-party exclusives and new intellectual property over the next five years.

On platform infrastructure, the memo describes systems that have grown overly complex, with hundreds of dependencies and heavy reliance on external vendors. It calls for more in-house engineering, rebuilding and evolving the software stack to shorten delivery times and increase value delivered to players. The memo also says Xbox will evaluate capabilities across console, PC, mobile and streaming and consider mergers and acquisitions to strengthen those areas.

The memo lists actions taken in the first 100 days, including accelerated updates to services, a Game Pass price decrease and the launch of the Xbox Player Voice feedback site. It says the next 100 days will prioritize resetting priorities and making difficult decisions and warns some outcomes may be “surprising” or “even frustrating” for employees and players. The memo notes reports circulating before its release suggested major job reductions could be part of the adjustments.

The document frames the priorities as a response to higher component costs, lower margins and a crowded attention market, and sets goals to improve margins, secure hardware supply, better fund flagship franchises, simplify engineering systems and sharpen the content pipeline.