Skip to content 
New Xbox boss Asha Sharma has acknowledged the ongoing financial struggles of Microsoft’s gaming business, amid a shakeup and repositioning of the brand around its core fans.
Sharma, who replaced Phil Spencer as boss of Xbox earlier this year, has spent her first months in the job making a number of significant changes as Microsoft works to win back the hearts and minds of its core gaming fans. Among them was the end of the controversial ‘This is an Xbox’ marketing campaign, the suggestion that Xbox exclusives may return, and a Game Pass price cut.
But Sharma takes over Xbox at a time of real financial struggle for the business, which showed continued declines during Microsoft’s latest financial results. In the three months ending March 31, 2026, Gaming revenue decreased 7%, Xbox content and services revenue decreased 5%, and Xbox hardware revenue (money made from the sale of Xbox consoles) declined 33%.
(Microsoft does not break out dollar figures for Xbox revenue, nor does it make Xbox console sales public.)
That last figure, while the continuation of a trend, will be of particular concern to Sharma as she looks to turn the Xbox brand around. Xbox Series X and S sales have struggled for some time now, and reversing that trend six years into the console generation feels like a significant challenge.
“While we have made progress expanding the business and our margins, player and revenue growth has not yet met our ambition,” Sharma said in a tweet. “We know we have work to do to earn every player today and into the future.”
It’s worth noting that Sharma was only named boss of Xbox in February, so she’ll have had very little opportunity to impact the business’ financial results for the period reported here. We’ll get a better sense of the success or otherwise of recent changes in the months to come.
During Microsoft’s financial call, CEO Satya Nadella said Microsoft was doing the “foundational work required to win back fans and strengthen engagement across Windows, Xbox, Bing, and Edge.”
“In the near term, we are focused on fundamentals, prioritizing quality and serving our core users better,” he continued. “You see this in the work underway across our consumer products.
“And you also see this in Xbox where the team is recommitting to our core fans and players, and shaping the future of play. Last week’s Game Pass changes are one example of how we are staying responsive to customer feedback.”
And, in one bright spot for Xbox, Microsoft set new records for monthly Xbox active users in the quarter, as well as game streaming hours.
So, what’s the plan? Last week, Sharma and Xbox Chief Content Officer Matt Booty laid out new priorities and objectives for the Xbox team, including a reevaluation of exclusivity, a focus on affordability, and evolving third-party partnerships.
New feature drops on console “have been less frequent,” the pair admitted, while “our presence on PC isn’t strong enough.” They continued: “pricing is getting harder for people to keep up with. And core experiences like search, discovery, social, and personalization still feel too fragmented. Developers and publishers are asking for more, too: better tools, better insights, and a platform that helps them grow faster.”
Xbox said it wants to offer “flexible” pricing, and “stabilize Gen9 [Xbox Series X and S] as a healthy and high-quality base.” On the content side, Xbox wants to “grow and extend an enduring portfolio of franchises players love,” “evolve our [third-party] partnerships and strengthen our five-year slate,” and “expand into China, emerging markets, and mobile-first audiences.” There’s also the suggestion Microsoft may buy more video game studios to plug gaps.
This year, Microsoft will be keen for its big new games to make an impression on its bottom line. Playground’s Forza Horizon 6 and Fable are both due out this year, as are Gears of War: E-Day and the next Call of Duty. Call of Duty is under significant pressure to deliver this year after the disappointment of last year’s Black Ops 7. As part of the changes made in recent months, this year’s COD, rumored to be Modern Warfare 4, will not launch day-one in Game Pass.
Microsoft, though, doesn’t expect significant change in its next set of financial results, taking us up to the end of June. It predicted revenue to decline in the low-teens in Xbox content and services, in part because Game Pass is now cheaper. Hardware revenue, Microsoft said, should decline again.
All this comes with Microsoft’s next-generation console, Project Helix, looming over the horizon. While details are vague, we know it will play PC as well as console games, and it’s looking like a premium device that will command a premium price.
Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
