Reports suggest that Xbox may be preparing for additional layoffs as the CEO advocates for an "Xbox reset"
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Xbox is reportedly planning substantial staff reductions as part of a strategy overhaul, with a message to employees stressing the need to prioritize investments over the next five years. The communication also indicated a shift away from a heavy reliance on vendors to enhance self-sufficiency in engineering for future developments.
According to Bloomberg, CEO Asha Sharma is contemplating these measures to mitigate declining revenues. The potential workforce cuts are anticipated as Microsoft closes its fiscal year this month, though specifics are yet to be disclosed. Reports suggest significant budget reductions in marketing and other sectors are under consideration.
The company did not provide further comments on this development.
This information emerges as Sharma completes her initial 100 days in the CEO role, during which she addressed the necessity of combining optimism with realism in efforts to restructure the business. In a recent blog update, Sharma outlined five core focus areas, including attention competition, accountability margin issues, challenges in hardware components, the need for a content pipeline amid studio expansion tensions, and the current platform’s infrastructure.
Sharma and Matt Booty conveyed in a joint staff memo that the systems' complexity and dependency network are slowing progress, emphasizing a shift towards a self-reliant engineering culture. The goal is to enhance value delivery to players and streamline processes. Their plan involves revamping the system's architecture while evaluating mergers and acquisitions to strengthen their position in hardware, PC, mobile, and streaming sectors.
They acknowledged that these changes might surprise or upset some employees, reiterating that success will not come from obscuring facts or maintaining the status quo. The joint statement also echoed the 'everyday wins' mindset from the first 100 days, urging a push forward in hardware, content, experience, and services.
Notably, Sharma has emphasized the importance of lowering hardware production costs over merely creating high-performance consoles, a stance made prominent in the wake of a 33% decrease in hardware income in the third quarter, described by Sharma as concerning.
To counteract these trends, Xbox is focusing on platform-exclusive games, such as the newly announced "Gears of War: E-Day" and "Clockwork Revolution". Additionally, they are cutting the price of the Game Pass subscription. According to Sharma, these price adjustments have already begun yielding positive results, boosting subscriber numbers and enhancing retention rates.