Key information
Xbox faced difficulties during 2026, marked by studio closures and thousands of staff cuts across Microsoft's gaming division. According to an internal memo obtained by Windows Central, CEO Asha Sharma stated that the previous Game Pass strategy sent the balance sheet into a freefall.
Jez Corden suggested this resulted from damage at both ends to Call of Duty and the subscription service. Following the acquisition of Activision Blizzard, adding the franchise to the service simultaneously raised subscription costs and reduced game sales.
Despite these challenges, Sharma indicated that the company is returning to growth and reinvesting after hitting an all-time low. Previously, Sharma noted that margins were lower than comparable businesses and that the subscription failed to grow at the expected pace, falling short of targets reported by The Wall Street Journal.
After replacing former boss Phil Spencer, Sharma adjusted pricing and altered day one availability for titles like Call of Duty. Reports also point to potential upcoming changes, including lower-priced tiers or ad-supported subscription options intended to expand reach.
