Layoffs and change of direction: new course for Xbox

Confirmation of the crisis came directly from the top through an internal note signed by the CEO of Xbox, Asha Sharma, and the head of content, Matt Booty. The document announces an extraordinary restructuring plan called “Xbox reset”, to be implemented in the next hundred days to deal with a financial situation that is no longer sustainable. The leaders highlighted how, net of the acquisition of Activision Blizzard King, investments in content, platforms and hardware subsidies have exceeded twenty billion dollars in the last five years, compared to annual revenues decreased by almost half a billion dollars in the same period of time.

Complicating the macroeconomic picture is a serious crisis linked to the supply of hardware components. According to what was declared by management, the costs of materials estimated for the Christmas period of 2027 would be more than five times higher than the prices of two years ago, with a similar trend also recorded in the memory sector. A dynamic that will force Microsoft to redesign future business models, opening up the possibility of forging partnerships with PC OEM manufacturers for the creation of Xbox brand devices based on AMD chips, thus reducing direct exposure on the physical production front.

The current infrastructure of the platform is not considered suitable to face the challenges of the market, pushing the management to plan an evolution of the technology stack which will also include potential mergers and acquisitions in the PC, mobile and streaming sectors. The new strategic course is part of a period of strong management decisions by the new company course, which has recently redefined the priorities of the software catalog by securing the temporary console exclusivity of highly appealing titles such as Gears of War: E-Day and Clockwork Revolution.