Overview
- Xbox CEO Asha Sharma and content head Matt Booty posted a memo Wednesday saying heavy spending and declining revenue left the division with about a 3% internal margin and that the current model cannot continue.
- Bloomberg reported that major job cuts are planned soon after Microsoft’s fiscal year ends on June 30, and several outlets say Xbox will also sharply reduce marketing and other budgets, though the exact scale of layoffs is unconfirmed.
- The memo discloses that, excluding Activision Blizzard King, Xbox spent more than $20 billion on content, platform and hardware subsidies over five years while annual revenue fell roughly $500 million.
- Sharma has already shifted strategy on content and hardware, naming select first-party titles as Xbox console exclusives and warning that Project Helix faces a component-cost crisis that may require new hardware partnerships or subscription models.
- The changes threaten widespread staff and studio impact, with employees facing layoffs or reassignments and the division expected to reprioritize projects as it tries to restore profitability.