Xbox leadership under newly appointed CEO Asha Sharma announced a major "reset" of the business on June 10th following several months in the role. The restructuring memo, sent alongside chief content officer Matt Booty, outlined significant operational challenges: a narrow 3 percent accountability margin, substantially elevated component costs resulting from memory and storage shortages, and an over-extended studio system requiring consolidation.

Microsoft is preparing to announce substantial layoffs on July 6th, with reporting indicating plans to close or spin off at least five studios and cancel multiple in-development games, notably the Marvel's Blade project. The reset occurs alongside concurrent strategic shifts in Xbox's business model, including price increases for consoles, restructured Game Pass pricing without new Call of Duty releases, and renewed emphasis on console-exclusive franchises. However, some projects including Hideo Kojima's OD horror game are reported to be continuing under Xbox's publishing arrangement.