Xbox CEO Asha Sharma has issued a memo to staff outlining how the platform intends to recover after a bruising month of layoffs and studio divestments. The document, obtained by Game Developer, The Verge, and CNBC, sets a target of returning Xbox to both player and revenue growth by the end of fiscal year 2027, which runs through June of next year.
Sharma, who took over Xbox in February, framed the recovery around what the memo calls a "four C's" approach: core, content, creation, and connection. "We will not live on past successes or be trapped by past failures," she wrote, according to GamesIndustry.biz. "We will learn from both and put our energy into creating what players will love for decades."
What the plan actually says
The "core" priority puts console back at the center of the strategy, with Game Pass, Windows, and streaming positioned as the platform "for new players and developers." On content, Sharma indicated that three Xbox properties each generate over $1 billion a year, and that the company will move away from a "broad and decentralized system" toward a tighter focus on its strongest franchises and biggest new ideas, plus a further push into mobile.
Minecraft gets singled out for heavier investment. "User-generated content has driven over 60 percent of net consumer spending growth outside China since 2021," Sharma wrote. "Minecraft is the best-selling game in history and one of the world's largest creative communities. We will invest in Minecraft more than ever before." The stated goal is to turn the game into "the world's creator platform," expanding tools that let players build, share, grow audiences, and earn.
The transmedia ambitions are the least surprising part. Sharma said Xbox will build long-term plans for its biggest franchises across film, television, consumer products, sponsorship, live experiences, and new global partnerships, including in China.
Longer term, the memo sets an FY30 ambition of being "halfway to our long-term daily-player goal" with sustained double-digit growth in players and engagement, alongside "industry-leading margins."
The backdrop is grim
The optimism arrives after a rough stretch. GamesIndustry.biz, citing Microsoft's financial results, reported a $1.7 billion revenue decline last year and a 10 percent drop in quarterly revenue. Sharma acknowledged that although more than 200 million new players joined in FY26, the "business did not grow with our audience," and said closing that gap "will take time."
Accounts of the cuts vary slightly across outlets. Game Developer reports 1,600 workers were laid off in early July with another 1,600 planned for the next fiscal year, while GamesIndustry.biz cites 3,200 employees affected. On studios, The Verge says Xbox spun off four studios, while GamesIndustry.biz reports the divestment of five. Microsoft has also faced legal action from labor unions over its handling of the layoffs, per Game Developer.
Microsoft CEO Satya Nadella described the moves as "making the necessary decisions required across our content portfolio, platform, and operations to reset the business for long-term growth," adding that the company expects to return the business to growth in fiscal 2027.
What it means for players
For anyone tracking upcoming Xbox releases, the memo reads as a signal that the platform will concentrate resources on its biggest names rather than spreading them thin. That points to continued heavy support for Minecraft and Xbox's billion-dollar franchises, with a growing emphasis on mobile and cross-media spinoffs. The flip side of "more focused" is fewer bets, so smaller or experimental projects may be the ones most at risk as Xbox chases its FY27 growth targets.