It's no secret that Xbox has had a rough time in 2026. With nearly 2,000 staff cut as part of sweeping layoffs and studio closures, Microsoft's gaming business is in the middle of one of the most significant restructures in video game history. But what led Xbox to this point? According to CEO Asha Sharma, Game Pass played a key role.
Today, in an internal memo obtained by Windows Central, Sharma reiterated that Microsoft's Game Pass strategy sent Xbox's balance sheet into "freefall." Jez Corden, who initially reported on this memo, suggested that this was because of "the damage at both ends to Call of Duty and Xbox Game Pass."
But for all the doom and gloom of Game Pass's consequences, Sharma suggested that Xbox is on the way up. In the memo, Sharma said: "We're making the right decisions to reinvest in the business, after an all time low, we've started to return to growth, more than 2 to 3 times what we were, and we expect that to continue."
In the past Sharma has made statements suggesting that Xbox needs to reach more than 1 billion people each day. And while Xbox probably isn't hitting those numbers any time soon, the reported return to growth shows the company is, financially at least, heading in the right direction. It probably doesn't hurt that Blizzard's World of Warcraft: Forever looks like a hit.
It seems like Xbox is going to work to make Game Pass more accessible in the future too, though with a few catches. Last month, there were rumors that Microsoft would be introducing new tiers of Game Pass without the day one launches, both with and without ads. Around the same time, Microsoft also filed a patent that would suspend your game in order to show you an ad for additional game time.
If Microsoft was able to introduce these changes at a low enough price point, it could expand Game Pass by simply being a more affordable way to play games. Those rumors last month suggested the ad-supported tier would be $12.99, which seems high for such a subscription, especially when the base price is $9.99 right now. But if Microsoft was able to lower its asking price, a more limited ad-supported Game Pass could absolutely bring in new players, which does seem to be Sharma's goal.
When Sharma announced the Xbox layoffs in the summer, she admitted that Game Pass had failed to grow as Microsoft had expected.
“Our business today is not healthy,” Sharma said at the time. “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.”
سەرچاوەی فەرمی بە زمانی ئینگلیزی: https://www.ign.com/articles/previous-game-pass-strategy-sent-xbox-into-freefall-ceo-asha-sharma-reportedly-tells-staff
