Today, Xbox CEO Asha Sharma addressed the entire Xbox in an internal town hall, the transcript of which was shared on Windows Central and verified by reliable sources.
Xbox has undergone something of a reset this year, with divestitures, layoffs, and structural changes. Xbox Game Pass removed Call of Duty and got a major price cut, Xbox also returned to exclusive games and content and began investing again in the marketing and features of its Xbox Series X|S consoles for the first time in years.
“Why do we exist?” Sharma said: “We exist to be where the world plays, we will know when we have a billion people active daily, and we have the right to win because we are now focused on our fans and our franchises.”
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Sharma noted that Xbox was down in terms of hours spent, players and revenue at the start of the year. She now says that Xbox has stabilized in terms of hours spent, and she now says that after year-over-year declines, Xbox has returned to growth. She reiterated that Xbox Game Pass’s previous strategy caused Xbox’s bottom line to “freefall,” likely referring to the damage done on both ends by Call of Duty and Xbox Game Pass.
“We are making the right decisions to reinvest in the business. After a historic low, we have started to return to growth, more than 2 to 3 times what we were, and we expect that to continue.” Asha Sharma also criticized Gears of War: E-Day, Minecraft Dungeons 2, and World of Warcraft Forever for their “strong” starts, and noted that Xbox has seen a 30% increase in positive brand sentiment over the past year.
Expanding on Xbox Series X|S, leveraging Xbox Helix, Xbox Game Pass, and other handhelds?
Core, Content, Creation, and Connection are the “four Cs” described by Asha Sharma as driving Xbox forward. She said that Xbox’s position in the market suggests that it needs to invest more in the Xbox console, despite the fact that the overall segment is not growing in the gaming industry – she says that Xbox still has an opportunity to grow in this sector. She also said that Xbox had no “right” to expand beyond the console if it couldn’t serve its “most valuable players in the right way.”
Asha Sharma says strengthening Gen 9 (Xbox Series She also hinted that Xbox Game Pass will become more “flexible for more players” in the future, reiterating previous indications that users will be able to customize exactly what types of content they want to access in the service.
Asha Sharma also called Gen 10 the Xbox Helix, describing it as a “family of devices.”
“We’re moving to a family of devices for Gen-10. There’s no one device that fits all. We’ll definitely have a great console first, but we also know that a lot of gamers will be on the go. There are some things that we’re the best in the world at making, and there are other things that we’ll collaborate on. So we’ll share more about that as our projects develop. The OS is starting to look really good. We’re very excited about it.”
Asha Sharma also spoke about Xbox PC and Battle.net, speaking about her plans to develop Battle.net as a platform. She said that Battle.net is almost on par with Steam in terms of user retention, and that the recent partnership to bring CD Projekt RED games like Witcher 3 to Battle.net will grow further. “We will do it the right way for these communities,” she said, hinting that Battle.net will remain a more curated store than Steam or Xbox PC.
Regarding other opportunities, Asha Sharma also revealed that Xbox PC is, in fact, the number 1 PC gaming storefront in China (although it has been suggested to me that this claim probably excludes China-based Steam users using a VPN – I’ll explore this comment a little further.)
Update: I’ve been told that Asha Sharma is referring to the Windows Store here, not necessarily the Xbox PC Store, which, while related, are indeed technically separate. As a reminder, the Windows Store is installed by default on Windows 10 and 11 PCs and contains many games that are not available on Steam, including Fortnite and Roblox.
Asha Sharma also said that she will continue to invest in other PC applications where there is a distinct audience, for example Steam in general.
Sharma also said that Xbox is “simplifying” the target and streamlining the publishing APIs on Xbox to make it easier for developers to ship to Xbox Series X|S, Xbox Helix, and Xbox PC – which has long been a pain point.
Xbox’s strategy seems the right one, for now
Xbox saw tons of layoffs over the summer as part of a major effort to further restructure the company away from the growing costs of Microsoft’s bureaucracy. To that end, it moved some Xbox studios under the management of purpose-built publisher subsidiaries like Activision and Bethesda, divested some, and closed others.
Microsoft also doubled down on its core audience, Xbox console gamers, whose neglect became untenable earlier this year as Microsoft seemed to focus on forward-looking telemetry data at the expense of current reality.
Indeed, I wrote two years ago that Xbox was neglecting its core business at the cost of growth that might never materialize, and it appears that growth indeed never materialized in the previous strategy.
There were positive shots throughout Sharma’s speech to Xbox staff, but she still emphasized caution regarding the state of the economy, the RAMpocalypse, and widespread disruption in the entertainment industry.
What do you think of Xbox’s new strategy so far? Let us know in the comments.
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