Microsoft is restructuring Xbox after gaming chief Asha Sharma admitted the business is “not healthy.” Thousands of layoffs and major studio changes suggest the company’s long-term strategy failed to deliver the results executives promised.
Microsoft is encouraging workers to embrace AI and prepare for the future, but a newly surfaced Xbox memo tells a very different story. The company admits Xbox revenue declined despite more than $20 billion in spending, acknowledges hardware challenges, and says the gaming division needs a reset. The timing raises questions as Microsoft continues discussing AI-driven productivity while reports of additional layoffs swirl.
Phil Spencer is retiring from Microsoft after 38 years, ending a defining era for Xbox. Asha Sharma now takes over as CEO of Microsoft Gaming, marking a major leadership shift inside one of the industry’s biggest platforms.