Asha Sharma, the chief of Microsoft's Xbox gaming unit, has launched a plan to surpass Sony and Nintendo on profit margins by 2030 [1].
The strategy marks a significant pivot for the company as it acknowledges that previous investments in studio acquisitions and Game Pass have not yielded the expected returns. By restructuring its operations, Microsoft aims to accelerate revenue and player growth to compete more effectively with its primary industry rivals.
In a memo to employees, Sharma said, "We must reset Xbox." This memo outlines a year-long restructuring plan and admits that the company's bet on studio acquisitions and Game Pass has not paid off.
As part of this reset, Microsoft will fire 3,200 employees [3]. This workforce reduction represents a 20% target for the Xbox unit this year [4]. The company is also splitting with four Xbox game studios as it streamlines its internal production [3].
The roadmap includes a renewed focus on Minecraft and the expansion of strategic partnerships, including efforts to grow within China [1]. According to an unnamed source, the gaming unit is first targeting margins that are comparable with Sony and Nintendo before attempting to exceed them over the longer term [2].
Sharma's multi-year roadmap is designed to shift the unit toward higher profitability and sustainable player growth [1]. The shift comes as the company seeks a more efficient operating model to support its global gaming ambitions.
“"We must reset Xbox,"”
This restructuring indicates a move away from the aggressive acquisition-led growth strategy that defined Microsoft's recent gaming history. By focusing on high-margin targets and specific intellectual property like Minecraft, Microsoft is prioritizing financial efficiency over sheer market share or content volume.
