Leadership Transition

Asha Sharma became CEO of Xbox in February 2025, succeeding Phil Spencer who retired after 38 years at Microsoft. Former Xbox President Sarah Bond also departed the company. Matt Booty was promoted to Chief Content Officer. The division was rebranded from "Microsoft Gaming" back to "Xbox" effective immediately.

New executive appointments include:

• Matthew Ball appointed Chief Strategy Officer, reporting to Sharma. Ball previously published an annual State of Video Gaming Report and held roles at Illumination, Amazon Studios, and Accenture Strategy.
• Scott Van Vliet appointed Chief Technology Officer, previously leading Azure AI infrastructure at Microsoft.
• Chris Schnakenberg promoted to Corporate Vice President of Partnerships and Business Development.
• Four executives from Microsoft's CoreAI division joined Xbox: Jared Palmer (engineering), Tim Allen (design), Jonathan McKay (growth), and Evan Chaki (forward-deployed engineering).
• Craig Duncan, head of Xbox Game Studios, and Louise O'Connor, chief of staff, departed the company.
• Jason Ronald, Vice President of Next Generation, was promoted and is accountable for Project Helix and platform operations.
• Kevin Gammill, Corporate Vice President of Xbox user experience, left after nearly 20 years at Microsoft.
• Roanne Sones, Corporate Vice President of Xbox devices and ecosystem, took a leave of absence and transitioned to an advisory role.

"We are Xbox." — Division slogan

Financial Performance

Microsoft reported Q3 FY2025 revenue of $82.9 billion, up 18% year-over-year. Key gaming figures:

• Xbox hardware revenue declined 33% year-over-year.
• Xbox content and services revenue declined 5%.
• Gaming revenue overall dropped 7% ($380 million) in the quarter.
• The division ended the fiscal year with approximately a 3% accountability margin, down year-over-year.
• Excluding Activision Blizzard King, Xbox spent over $20 billion over five years on content, platform, and hardware subsidies, while annual revenue declined nearly $500 million.

Microsoft's total capital expenditures reached $31.9 billion, up 49%. The company's AI business achieved an annual revenue run rate of $37 billion, up 123% year-over-year.

Game Pass Pricing and Subscriber Changes

April 2024 Price Reductions:

• Ultimate tier: reduced from $29.99 to $22.99 per month.
• PC tier: reduced from $16.49 to $13.99 per month.

Context:

A 50% price increase in October 2025 raised Ultimate from $19.99 to $29.99, leading to "millions" of subscriber losses over several months.

"Game Pass has become too expensive for players" — Asha Sharma

Sharma stated in internal communications that the current model "isn't the final one." After price reductions, subscriber acquisitions grew and retention improved.

Call of Duty titles were removed from day-one launch lineup; new COD titles will be added to Ultimate and PC tiers one year after initial release.

Future Plans:

• The company aims to evolve Game Pass into a "more flexible system" over time.
• A potential new tier codenamed 'Trion' may include only games from Xbox Studios, according to tipster redphx.
• Microsoft is examining ways to bundle third-party services with Game Pass, including potential partnerships with Netflix.
• Microsoft has reportedly paused signing new third-party Game Pass deals during the restructuring.

Exclusivity Strategy

CEO Asha Sharma stated that exclusivity decisions are evaluated on a case-by-case basis. She described the tension between being a publisher requiring wide audience reach and a platform requiring exclusive content.

"Live service and multiplayer games will remain multiplatform" — Matt Booty, Chief Content Officer

Chief Content Officer Matt Booty confirmed that live service and multiplayer games will remain multiplatform, while exclusivity for other titles will be determined case by case.

Confirmed Exclusives (Xbox console and PC only):

• Gears of War: E-Day
• Clockwork Revolution

Confirmed Multiplatform Releases:

• Fable (PS5 launch on February 27)
• Halo: Campaign Evolved
• Forza Horizon 6
• Senua (PS5, 2027)
• State of Decay 3 (PS5, 2027)
• Previously announced multiplatform titles remain on track

Gears of War: E-Day, previously planned for PS5 release according to journalist Jeff Grubb, had its PS5 version cancelled under new leadership.

Next-Generation Console: Project Helix

Hardware Details

Codenamed Project Helix, described as a PC-console hybrid. Will support both Xbox console games and PC games.

• Features a custom AMD system-on-a-chip (SOC), codenamed "Magnus."
• Will incorporate AMD FSR Diamond upscaling technology with machine learning and frame generation.
• Designed for significant ray tracing performance improvements, including path tracing.
• Will support Xbox Full Screen Experience, with ability to access Windows Desktop and install third-party platforms (Steam, Epic Games, GOG, etc.).

Reported Specifications (from leakers):

Performance is described as "an order of magnitude improvement" over current generation.

Insider Moore's Law Is Dead claimed performance equivalent to $2,000-$3,000 gaming PCs. The chip will not be sold separately to consumers, according to leaker KeplerL2.

Availability and Pricing

Microsoft is exploring "radically different" business models to address affordability, including financing options and buy-now-pay-later services through PayPal and Klarna. Xbox Vice President Jason Ronald confirmed Project Helix will be available as a first-party Xbox console.

Supply Constraints

Component shortages, particularly memory and storage, are affecting pricing and availability:

• Console storage component prices increased over 2x between fall and February, then doubled again.
• Projections of over 5x prices from two years earlier by holiday 2027.
• Memory costs followed a similar trajectory.

"Memory costs will impact pricing, will impact availability." — Xbox CEO Asha Sharma

Demand for Xbox consoles currently exceeds supply, according to Chief Strategy Officer Matthew Ball.

Branding and Marketing Changes

• The division rebranded from "Microsoft Gaming" to "Xbox."
• The "This is an Xbox" marketing campaign was discontinued. Sharma stated the campaign "didn't feel like Xbox" and is "personally leading a reset of how we show up as a brand."
• The Xbox logo was updated to an all-caps "XBOX" design, following a fan poll.
• Division slogan: "We are Xbox."

Console Price Increases

Microsoft announced its third console price increase since late 2025:

Microsoft attributed price increases to 2.5x rises in storage and memory costs, with further increases expected.

Studio Restructuring and Layoffs

According to multiple reports, Microsoft is planning significant studio restructuring.

Reported Closures or Spin-offs:

Projects:

A Blade game developed by Arkane Studios may be cancelled, reportedly over budget and delayed.

Layoffs:

Reports indicate significant layoffs beginning in July, after Microsoft's fiscal year closes on June 30. At least 1,000 job losses rumored, with five studio closures affecting at least 500 employees before wider cuts.

"Xbox must become a 'sustainable' business" — CEO Satya Nadella

Nadella noted that Microsoft has "subsidized" entertainment without proper monetization.

Platform and Engineering Initiatives

• Microsoft is integrating Windows and Xbox engineering teams to build a shared platform.
• Sharma instructed engineering teams to work on requested console features including a cleaner Xbox guide, custom UI colors, and ability to disable Quick Resume on a per-game basis.
• The company is developing Xbox Full Screen Experience for Windows computers, rolling out to select markets.
• Advanced Shader Delivery introduced for precompiled shaders.
• Xbox Play Anywhere program now includes over 1,500 titles.
• Backward compatibility program resumed for Xbox's 25th anniversary, with plans to re-release older titles.

Market Position

• Xbox console sales declined 33% year-over-year in fiscal Q3.
• Xbox was outsold by Nintendo Switch, Switch 2, and Sony PlayStation 5 in Q1 2026.
• The company has fallen behind rivals Sony and Nintendo over the past two console generations.
• Key priorities under new leadership: hardware, content, experience, and services.