According to Xbox head Asha Sharma, the company's business is "unhealthy" today, and a large-scale restructuring of Microsoft's gaming division should change the situation in the coming years.
In her address, Sharma noted that Xbox operates with margins that are 3-10 times lower than comparable platform companies and game publishers. In addition, the company entered the ninth generation of consoles with a smaller user base and a significantly higher cost structure.
According to the executive, in recent years, Xbox's growth has largely been driven by the Game Pass subscription service, multi-platform game releases, and an expanded content lineup. However, despite creating additional value for players and the business, growth rates did not meet management's expectations. This led to a weakening of the core business, and achieving better results required more and more teams, investments, and time.
Sharma also emphasized that the gaming industry is experiencing "the most severe hardware crisis in history", which further complicates the development of the console business.
Another important conclusion reached by Xbox management was the recognition that the company "is not the best home for every type of studio". According to the statement, in a typical year, the division lost 64 cents for every dollar invested, highlighting the need for drastic changes in strategy.
Despite painful cuts, Xbox management assures that it does not intend to reduce the volume of investments in the gaming business. Instead, the company will focus on more targeted resource allocation and strict control over spending efficiency.