Xbox has certainly faced a lot of struggles in the last year that have culminated in a shakeup and new leadership under Asha Sharma, the current executive vice president and CEO of Xbox, formerly known as Microsoft Gaming. Although Microsoft certainly saw an increase in profits last year, this could not be said for the then-Microsoft Gaming, which according to its fourth-quarter earnings report experienced a 10% drop in content and services year-after-year. Even worse, across 2025, Microsoft Gaming saw a decrease in revenue by 7% or $1.7 billion. According to the report, “XBOX content and services revenue decreased 5 percent on a prior year comparable that benefited from strong first-party content performance, offset in part by growth in XBOX Game Pass. XBOX hardware revenue decreased 29 percent driven by lower volume of consoles sold”.
This all comes in the wake of massive layoffs that have occurred across Xbox, leading to a 2026 forecast of 14,259 layoffs. We’ve seen Xbox shift its focus away from smaller indie studios in order to focus on larger franchises under the Xbox brand, including Fallout, The Elder Scrolls, Halo, Gears of War, etc. As a result, studios such as Ninja Theory, Undead Labs, and Double Fine have parted ways with Xbox, and as of now the fate of Arkane Studios, creators of games such as Dishonored, Prey (2017), and Deathloop, is up in the air. It doesn’t help that Call of Duty: Black Ops 7 performed poorly compared to previous releases, especially given Microsoft spent $70 billion to acquire Activision Blizzard back in 2023.
Another issue includes the increased prices on consoles as a result of the current AI boom due to a demand for memory chips needed for AI data centers. Yes, the technology that is largely resulting in an increase in social media slop, the internet being filled with bots, and disturbing mass surveillance is making our lives more expensive and miserable. As a result, the Xbox Series X has increased by 33% in price since its launch in 2020, now costing $750 for consumers.
