Key information
Xbox CEO Asha Sharma reportedly stated in an internal memo that the company's past Game Pass strategy placed the Xbox balance sheet into a freefall. According to Jez Corden, who initially surfaced the memo, this resulted from damage caused to both Call of Duty and the subscription service.
Following the acquisition of Activision Blizzard for USD 69 billion and the inclusion of Call of Duty in the service, subscription costs escalated while individual game sales declined. During summer layoffs, Sharma noted that the business was operating on profit margins three to ten times lower than comparable platforms, and that Game Pass failed to grow at the expected pace.
While Microsoft had previously hoped to reach roughly 77 million subscribers this year, the actual count sits at approximately 30 million. Following her appointment as Xbox chief replacing Phil Spencer, Sharma lowered the price of Game Pass and removed Call of Duty as a day-one title.
Sharma recently told Bloomberg that Xbox has managed to rebalance Game Pass following an eight-month decline, noting that the service has returned to growth and is increasing retention.
