Xbox CEO Asha Sharma tells staff brand has started to return to growth

Xbox has reversed months of steep declines in player engagement and revenue and begun expanding again, chief executive Asha Sharma told employees at an internal town hall.

Speaking to staff in remarks first reported by Windows Central, Sharma said Microsoft's gaming division had hit an "all-time low" earlier this year, suffering what she described as "freefall" balance-sheet contractions across hours played, user totals, and revenue. That trajectory, she said, has now shifted following an aggressive corporate reset.

"We’re making the right decisions to reinvest in the business," Sharma said. "After an all-time low, we’ve started to return to growth, more than two to three times what we were, and we expect that to continue."

Sharma, who took over Microsoft’s gaming division in the spring, attributed the initial turnaround to a deliberate retreat from previous expansion strategies. Earlier this year, Xbox pulled Call of Duty from certain Game Pass tiers, trimmed subscription pricing, revived platform exclusives, and renewed marketing support for its Xbox Series X and Series S consoles. She also cited a 30 per cent improvement in positive brand sentiment over the past twelve months and credited recent rollouts—including Gears of War: E-Day, Minecraft Dungeons 2, and World of Warcraft Forever—with strong initial momentum.

Refocusing on consoles and Project Helix

Central to Sharma's presentation was an explicit recommitment to home console hardware, an area Xbox had de-emphasised in recent years. She outlined a strategy anchored on "four Cs"—core, content, creation, and connection—arguing that Microsoft cannot justify chasing a broader gaming audience if it neglects its base.

"We don't have the right to grow beyond console if we can't serve our most valuable players the right way," Sharma said.

Alongside near-term features for current-generation machines, such as a disc-to-digital conversion initiative and expanded Xbox Play Anywhere support, Sharma offered early details on Microsoft's tenth-generation hardware, codenamed Xbox Helix.

Rather than relying on a single dedicated box, Sharma described Helix as a "family of devices" designed to accommodate both living room play and portable gaming. Microsoft plans to build its flagship home console in-house while partnering with external manufacturers for on-the-go devices, supported by a newly unified operating system.

Sharma also previewed changes to Xbox Game Pass, saying the service will become more flexible so subscribers can tailor the content packages they pay for, and outlined plans to expand the PC platform Battle.net through curated partnerships such as The Witcher 3.

Cost-cutting and layoffs still ahead

Despite the upbeat tone regarding revenue and engagement, the internal address took place against an unsettled backdrop for staff. Microsoft has spent the summer executing sharp structural cuts, shuttering several internal studios, moving others into publisher subsidiaries like Activision and Bethesda, and eliminating thousands of roles.

The pain across the division is not over. Xbox chief content officer Matt Booty cautioned last month that the restructuring effort was roughly 75 per cent complete, leaving hundreds of additional staff facing redundancies in the months ahead. Sharma also noted external economic headwinds, hardware component shortages, and broad instability across the entertainment sector as reasons for continuing caution.