Xbox's new CEO has announced a 'business reset,' reportedly planning massive layoffs and significant budget cuts.
Asha Sharma, who became CEO of Microsoft's
Next 100 Days: XBOX Reset - XBOX Wire
https://news.xbox.com/en-us/2026/06/10/next-100-days-xbox-reset/
CEO Sharma shared some information, stating, 'There are realities we must confront.' One piece of information is that the company's accountability margin for the most recent fiscal year was 3%, a decrease from the previous year. The accountability margin is a term used by Microsoft, and past reports have stated that the overall target is 30%, but it has not been revealed how much of this target Microsoft has actually achieved. However, in terms of annual revenue, it appears to have decreased by $500 million (approximately 80 billion yen) over the past five years.
Another issue is the crisis of parts shortages. When CEO Sharma took office, the procurement price of storage components for consoles had more than doubled since the fall of the previous year, and has since doubled again. Plans for the 2027 holiday season anticipate prices to be more than five times higher than in 2024. Memory costs have followed a similar trend, and CEO Sharma declared that they are currently unable to produce enough units to meet player demand, stating that a new business model and partnerships are necessary.
Furthermore, there are issues with the studio's structure. The Xbox division expanded its operations to handle multiple businesses, including subscriptions and streaming services, but it seems they have spread themselves too thin. Therefore, CEO Sharma says that over the next five years, they need to re-evaluate the balance of other investment priorities, while prioritizing the supply of exclusive titles and new IPs that are essential for success.
Prior to the release of this message, Bloomberg reported, citing information obtained from a Microsoft employee, that 'the Xbox division is planning to implement large-scale layoffs immediately after the end of its fiscal year on June 30, 2026, and is also planning significant budget cuts in its marketing department and other business areas.'
Xbox Plans Significant Layoffs as It Transforms Under New CEO Asha Sharma - Bloomberg
In addition, CEO Sharma stated that 'the system has become excessively complex, involving hundreds of dependencies, and operations are too dependent on vendors, so we must cultivate an independent engineering culture.' He added that the company will consider rebuilding its internal systems, strengthening employee capabilities, and exploring M&A opportunities.
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