Xbox CEO Outlines Growth Strategy After Billions in Revenue Loss

Xbox CEO Asha Sharma issued a staff memo on July 30 detailing a strategic plan to recover from a period of financial decline, which included a 10% quarterly revenue drop and an annual loss of approximately $1.7 billion. The strategy aims to return the gaming division to growth by the end of fiscal year 2027 and achieve industry-leading operating margins by 2030. Sharma intends to raise the division's current 3% accountability margin to compete with Sony and Nintendo, which report ratios of 9.88% and 15.6% respectively.

The plan centers on four priorities: strengthening the console-led platform, expanding global franchises, evolving Minecraft into a world creator platform, and extending existing game worlds. Xbox will shift from a decentralized studio model toward a franchise-focused approach, increasing investments in Minecraft and Candy Crush while targeting expansion into film, television, and the Chinese market. The long-term goal is to reach 500 million daily active users by 2030, halfway toward an ultimate target of one billion.

This pivot follows a significant corporate reset involving the divestment of four studios—Double Fine, Compulsion, Ninja Theory, and Undead Labs—and extensive workforce reductions. Microsoft laid off 1,600 employees on July 6, with total cuts for the fiscal year expected to reach approximately 3,200 to 3,600 positions. Microsoft CEO Satya Nadella stated the company is making the necessary decisions across its content portfolio, platform, and operations to reset the business for long-term growth.