Welcome back Xbox fans and fellow geeks!
As a long-time Xbox fan and owner of three Xbox game consoles, I can say that this current console generation has been disappointing and the current state of Xbox gaming is a huge letdown.
With the approval of Microsoft’s leadership, Team Xbox acquired a lot of game companies that include the giants Activision-Blizzard-King (ABK) and Bethesda, going right down to the smaller game studios. Those were acquired with the promise of new and exciting games that would make Xbox gaming really great in the form of exclusive games, new content for Game Pass subscribers and more.
Sadly, things turned out really disappointing and now the new Xbox head Asha Sharma has the tremendous challenge of making drastic reforms, downsizing and correcting the cases of mismanagement by the previous leadership. That said, she declared a hard reset of the Xbox business and the changes are being implemented already.
To put things in perspective, posted below is an excerpt from the Xbox announcement focused on Asha Sharma’s message to the entire team. Some parts in boldface…
We are beginning the most significant restructure in XBOX history. After careful consideration, I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management. I recognize that a year-long restructuring creates additional challenges. Unfortunately, it is not possible to make all the necessary changes in a single day, and I wanted to be direct about the scale.
I know this is painful. These changes will directly affect people who have poured their creativity into building XBOX. Many joined us through acquisitions, while others were recruited here, or sought us out because they loved this industry and loved XBOX. Today’s decisions do not reflect their talent or dedication.
Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.
First, we will reset our content portfolio.
Since 2018, we have aggressively expanded our studio portfolio while the number of games created each month across the industry now outpaces the last ten years combined. We now find ourselves competing not only with the largest publishers, but also with smaller independent studios. It is neither possible nor desirable to own every great independent studio. We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested. As we reset XBOX, we will help independent creators succeed by providing open development tools and audiences to realize their vision.
Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.
We are also making reductions across other units, and in some cases, shifting investment to focus on higher priority projects. These changes vary in size across Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios. None of our first party publicly announced games or projects are being cancelled as part of these reductions.
In addition, Mojang and King will now report directly to me. These two studios have increasingly become platforms and are our largest by monthly active players. They bring critical geographic, demographic, and differentiation to XBOX.
Second, we will reset our platform.
We know that great technology gets better when it gets simpler, not bigger. Today, in some parts of the company, work passes through as many as 14 layers of management. Our platform teams are 40% larger than they were at the start of this generation, even as our player base and playtime have declined. That complexity has slowed decisions, blurred accountability, and made it harder to deliver for players. As we reset XBOX, we will simplify.
We will reduce management layers to no more than 5, and where possible, 3. We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes. And we will streamline how we work across our tools, with a cleaner code base, shared services, and 50% reduced vendor spend.
Third, we are resetting how we operate.
As XBOX grew our headcount, we became more fragmented. Teams, studios, and functions often operate independently, and it became harder to work towards a shared goal, make the right tradeoffs, and get things done.
For the first time, we are establishing a Chief Operating Officer with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang has been promoted to this role and will report directly to me. Over nearly two decades at XBOX, Helen has helped build some of our most important businesses, from XBOX Live to leading Mojang and the Minecraft franchise. She will bring our businesses together under one operating model, making sure we make clear investment decisions, learn from our successes and failures, and hold ourselves accountable for results.
Thank you, Dave McCarthy, who is retiring after 17 years with XBOX. Dave has played a defining role in building the platform that millions of players rely on every day and has been a trusted partner through many of the biggest moments in XBOX’s history. We wish him all the best.
These changes are about a bigger future for XBOX, not a smaller one. The next decade of gaming will be larger, more global, and more creative than anything we’ve seen before. This year, we’ll invest as much in XBOX as we ever have, but we’ll invest with greater focus, greater discipline, and greater clarity, all in service of making XBOX where the world plays and creates.
I want XBOX to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect.
To see the full message, click https://news.xbox.com/en-us/2026/07/06/resetting-xbox/
Indeed, the Xbox business model deteriorated financially and became much harder to manage. The billions of Dollars spent on Xbox gaming over the past several years did not result in the great gaming experiences for fans and gamers, nor did it compel the Xbox game studios to become productive and disciplined.
First-party games of Xbox in the generation of Xbox Series X and Xbox Series S have been lackluster in quality and enjoyment overall. I played Starfield a lot on my Xbox Series X via Xbox Game Pass and my enjoyment of it has been limited compared with other games of Bethesda. Senua’s Saga: Hellblade II was fun at first but it ended up being hollow. As the said Ninja Theory-developed game lacked depth with its gameplay and game design, I never bothered to replay it after finishing it. Obsidian Entertainment, a company that specialized in making role-playing games (RPGs), produced new RPGs under the Xbox umbrella but none of them were great. In fact, Avowed and The Outer Worlds 2 ended up as commercial failures.
Going back to Asha Sharma’s message, I can say that letting go of Compulsion Games and Double Fine Productions was the right move as the huge amount of money Team Xbox spent of them did not result in great games. Compulsion Games’ South of Midnight was a $100,000,000 production that ended up with sales of way below one million copies. More notably, Compulsion Games has a discriminating woke and hateful community manager who goes by the handle @PikaChulita. Look at the captured evidence below.
Speaking of wokeness and discrimination, the controversial Matt Hansen has been laid off from Obsidian Entertainment. Hansen was heavily involved in the huge disappointment called Avowed. That being said, Team Xbox should really REMOVE all the untalented woke activists among its many game developers. Those activists – the feminists, the LGBTQ mob, the Islamists, the Black Lives Matter zealots and others – do not care about making great games at all and they have been misusing Microsoft’s money to turn new Xbox games into vehicles of Leftist/woke/socialist propaganda. Xbox should also cut off any ties with the super woke Sweet Baby Inc.
When it comes to the larger entities like Activision, Bethesda/ZeniMax, Blizzard, King and Mojang, the layoffs are painful but it makes sense to shift investment to focus on higher priority projects. Activision should regain focus on ensuring quality and great fun with its continued productions of Call of Duty (COD) games. Bethesda has to deliver new Fallout and The Elder Scrolls games faster and with the highest quality possible.
With the way things are right now, I am not certain if I will pursue the next-generation Xbox console called “Project Helix”. Memory has gotten much more expensive in recent times due to extremely high demand from artificial intelligence (AI) data centers and the memory manufacturers’ deals with AI companies. How much memory could the next-generation Xbox have and could its retail price exceed $1,000 at launch?
Indeed, the future of Xbox gaming is really clouded and I can only hope that the hard reset of the Xbox business under Asha Sharma will create positive changes and results. To say the least, the reforms have started and only time will tell what will happen next.
In ending this blog post, posted below are selected YouTube videos about the state of Xbox for your enlightenment.
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