“We will not live on past successes or be trapped by past failures,” CEO Asha Sharma wrote in a Thursday message to staff members that CNBC viewed. “We will learn from both and put our energy into creating what players will love for decades.”<\/p>\n
Sharma, a former Instacart<\/a> and Meta<\/a> executive, replaced Phil Spencer<\/a> as Xbox CEO in February. She has since appointed new leaders<\/a>, lowered Game Pass<\/a> subscription prices and announced layoffs and divestitures<\/a> of four development studios. Sharma has put more emphasis on exclusive titles for the Xbox console, delighting gamers who have seen the subsidiary bring franchises to Sony’s<\/a> PlayStation.<\/p>\n On Wednesday, Xbox turned in a 10% quarterly revenue decline \u2014 the most sluggish performance since 2022 \u2014 even as its parent surpassed consensus<\/a> in cloud infrastructure and productivity software. Microsoft stock spiked almost 16% on Thursday in its strongest session since 2008.<\/p>\n Sharma and Matt Booty, Xbox’s chief content officer, said last month<\/a> that they anticipated a 3% internal margin. Sony reported a 9.9% operating margin<\/a> from game and network services in the latest fiscal year, while Nintendo’s approached 16%<\/a>.<\/p>\n The Xbox Series X and Series S consoles have lagged behind the Nintendo<\/a> Switch and Sony PlayStation 5 in terms of shipments. <\/p>\n Sharma wrote in her Thursday memo that Xbox will make every function and studio responsible for the gaming group getting back to growth in terms of number of players and revenue in the new fiscal year that ends in June 2027.<\/p>\n “We will build long-term plans for our biggest franchises across film, television, consumer products, sponsorship, live experiences, and form new partnerships globally, including China,” she wrote. <\/p>\n Sharma also said she wants to see Xbox gain share in casual games, partly through Activision Blizzard’s King, which puts out Candy Crush Saga games.<\/p>\n Microsoft placed a giant bet on gaming with the $75.4 billion acquisition<\/a> of Call of Duty publisher Activision Blizzard in 2023. The deal boosted revenue, but the subsidiary became overextended. Consumers got to try new high-value Call of Duty releases for short periods through Game Pass for a small fee and leave without paying full price. Game Pass now excludes the first-person shooter titles.<\/p>\n Microsoft CEO Satya Nadella told analysts on the software maker’s Wednesday earnings call that in gaming, the company is “making the necessary decisions required across our content portfolio, platform and operations to reset the business for long-term growth.”<\/p>\n In 2014, Microsoft acquired Mojang, the developer of block-building game Minecraft, for $2.5 billion. It surpassed Tetris as the world’s best-selling game five years later.<\/p>\n Sharma told employees in her note that the company would “invest in Minecraft more than ever before, strengthening the experiences players love while expanding the tools that help people create, share, build audiences, and earn.”<\/p>\n Sharma wrote that revenue growth must speed up in the 2028 and 2029 fiscal years.<\/p>\n “By FY30, our ambition is to be halfway to our long-term daily-player goal with sustained double-digit growth in players and engagement and industry leading margins,” she wrote.<\/p>\n WATCH:<\/strong> D.A. Davidson’s Gil Luria on Microsoft layoffs: Gaming business has become ‘almost irrelevant’<\/a><\/p>\n
![\"D.A.](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2026\/07\/108330873-17833490401783349037-46994273031-1080pnbcnews.jpg\")