During the Xbox showcase on June 7, 2026, several strong titles were announced. Just 3 days later, we find out how bad things really are for the Microsoft console, and mass layoffs are on the horizon.
This is the current situation surrounding Xbox: In February 2026, Asha Sharma took over as CEO of Xbox and had an immediate challenging start. Sharma had no gaming background, coming instead from the AI division of Microsoft. While she quickly dismissed “soulless AI slop” in an official post, players remained skeptical.
Contrary to expectations, Sharma became quite popular in her first months: In March 2026, she terminated the controversial campaign in which Microsoft had declared absolutely any object on which Xbox games ran to be an Xbox. This raised hopes that the upcoming generation, codenamed “Helix”, would refocus on the console.
In April 2026, the drastic price increase of Game Pass from October 2025 was nearly reversed: From €17.99 for the Ultimate Pass back to €20.99, while the PC Game Pass had risen from €11.99 to €14.99 and ultimately settled at €12.99.
Additionally, Xbox under her leadership scrapped the AI tool, the Xbox Gaming Copilot, as it no longer fit the direction they wanted to develop.
With the Xbox Showcase on June 7, 2026, it now seemed that a new golden age was dawning for Game Pass users, as many strong blockbusters were shown.
Even in a Reddit thread from Monday, the community drew a positive conclusion:
- nixamhose: “To be fair, based on everything I have heard so far, most of her decisions seem good, especially for the Xbox brand.”
- thecontempl8or: “She has been criticized since she took the position. But with every decision she makes, I like her more.”
- FrancesoPlays: “Cool. She is winning.”
But just 3 days later, the business reality hits hard: Asha Sharma, along with Content Chief Matt Booty, addressed the workforce in an open letter on June 10, 2026, and it was impactful. Sharma reviewed her first 100 days at Xbox and outlined how things would proceed.
You can see the latest trailer for Fable, shown at the Xbox Showcase, here:
After the strong recent weeks, the cold shower follows
What has Xbox announced now? In the open letter, the strong Xbox franchises are initially praised, which are said to be among the “largest and most dearly loved” worldwide.
Then come the hard truths:
- Over the past 5 years, they have invested more than $20 billion in content, platforms, and hardware – and that without considering the acquisition of Activision Blizzard King. During the same period, annual revenues have decreased by nearly half a billion. “It cannot continue like this,” writes Sharma.
- Xbox is said to be more affected than others by the hardware crisis that Microsoft is pushing forward with its own AI investments. In February 2026, when Sharma took the CEO position, they were already paying twice as much for storage as they were the previous autumn. In the last 3 months, the price has doubled again, and by the holiday season of 2027, they expect a fivefold increase, and RAM prices are not looking any better either.
- They have overwhelmed themselves with studio acquisitions and cross-platform strategies, neglecting and underfunding their own “industry-leading” franchises.
- The digital foundation of Xbox is too complex and cumbersome; they are too dependent on external service providers. Now they need to become more independent.
Overall, the impression is that Xbox is facing problems on almost every front and has hardly any real strategies to counteract this. On one hand, they want to focus more on console exclusivity again, while on the other hand, cuts in the marketing budget are announced.
At least one solution seems clear: According to Bloomberg, mass layoffs are planned for the next fiscal year starting July 2026.
MeinMMO editor Karsten was skeptical after the showcase and saw mainly one thing in the announcements: a rekindling of the console war, where the winner seems to be already determined, and it is not the console players. You can read more about this here: Xbox is no longer interested in Sony, reigniting the old console war with a return to exclusive games
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