Now that the Xbox Games Showcase has come and gone, Asha Sharma is outlining what the next 100 days will look like at Xbox. Additionally, a new report suggests layoffs may be on the way at the company.
Reports Suggests Xbox Is Facing Incoming Layoffs
Xbox presented an impressive array of upcoming titles during the recent Xbox Games Showcase and surprised fans with the reveal of a new commitment to bringing back Xbox exclusives.
Despite the positive buzz around the presentation, a new report from Jason Schreier at Bloomberg suggests that Xbox is preparing to free up some resources by laying off employees.
“The layoffs, the exact scale of which is not yet clear, are expected shortly after the close of Microsoft’s fiscal year on June 30, according to people familiar with the company’s strategy… Xbox is also planning to significantly slash budgets for marketing and some other areas of the business.”
A related report from The Verge suggests that, “Sources suggest the cuts could even involve a studio closure, or changes to the Xbox studio lineup.”
Asha Sharma’s Next 100 Days
Despite the rumors of incoming layoffs, the official statements from Xbox still have a more optimistic tone. In a new memo posted to Xbox Wire, Asha Sharma lays out what she considers the five biggest realities that the company needs to face as it attempts to redefine what the Xbox brand means.
#1: Over 1 billion players choose to play XBOX and our games each year, for a total of 72 billion hours across Console, PC, Mobile, and Streaming (excluding much of China and a few other properties). Our franchises are also among the largest and most beloved globally and are now breaking records in TV and film. Going forward, our competition is attention. There are more great games, TV series, franchises, creators, content formats, apps, etc., than ever before.
#2: We will end this fiscal year at about a 3% accountability margin, down year-over-year. Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.
#3: We are in a hardware component crisis. When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade. We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.
#4: We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming, and devices. In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content. We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win. At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next 5 years.
#5: Our current platform infrastructure is not built for the battle ahead. Our systems are overly complex, spanning hundreds of dependencies, which hinders our ability to move fast. We’ve become too reliant on vendors to operate our systems and must become more self-reliant as an engineering culture to build for the future. We must increase the value we ship to players while decreasing the time it takes to do so. Going forward, we’ll evolve and rebuild our stack and look at capabilities across all of XBOX and potential M&A to help us win in hardware, PC, mobile, and streaming.
There’s no denying that Sharma’s message is outlining some major issues and problems she is hoping to solve. It’s easy to draw a line between issues like being “over extended” and the reports of incoming layoffs.
Be sure to check back soon for more Xbox news and updates as the story unfolds.
The post Xbox Shares Vision for Next 100 Days, But Layoffs May Be Coming Soon appeared first on VICE.
