Xbox CEO Asha Sharma has published an unusually blunt statement acknowledging that Microsoft's gaming business is "not healthy", operating at margins 3–10 times lower than comparable platform and publishing rivals, and announced a major "reset". The article argues that the crisis is the result of years of aggressive, poorly founded expansion under previous boss Phil Spencer — backed by Microsoft CEO Satya Nadella — in which Xbox chased scale through Game Pass, multiplatform releases, mobile and costly acquisitions, then doubled down as those bets failed to grow as hoped.

The reset involves cutting 1,600 roles immediately and 3,200 over the next 12 months, alongside the departure of five studios. Compulsion Games, Double Fine, Undead Labs and Ninja Theory are being spun out rather than shut down (Arkane's fate is undecided), which the author frames as the affair's only good news since their teams and projects survive. Studios across Activision, Bethesda, Blizzard, King, Mojang and remaining Xbox teams face varying "reductions", with King and Mojang expected to be relatively spared, while id Software and ZeniMax Online are reportedly hit hard now; Sharma also noted platform teams are 40% larger than at the generation's start despite declining players and playtime.