Xbox needs hits games and it needs them more quickly. That’s one of new CEO Asha Sharma’s main goals as she tries to fix the business, according to a new report from The Information. It cites three anonymous sources who claim Phil Spencer’s replacement is planning to cut lower-performing studios and projects to invest more resources in the company’s major franchises like Halo, Fallout, and The Elder Scrolls.
The report suggests that the game development budget across the Xbox portfolio will remain flat for the 2027 fiscal year, but with resources removed from some areas to help speed up development in others. It’s been five years since Halo Infinite launched and this year’s Halo: Campaigned Evolved is only a remake of the first game’s single-player content. The Elder Scrolls VI, meanwhile, seems to still be years away with Fallout 5 not coming until well after that. Sharma also reportedly wants to invest more in Minecraft, which is following behind Roblox.
According to The Information, Microsoft CEO Satya Nadella and CFO Amy Hood have signed off on Sharma’s redeployment of resources for the next fiscal year, which begins in July, but they haven’t ruled out restructuring the business entirely. That could mean turning Xbox into a wholly owned subsidiary like LinkedIn and Github, making it a joint-venture with some other company, or selling the thing entirely.
How quickly Sharma’s plan shows results could indicate which path Microsoft ultimately ends up going down. But in the short-term it will mean brutal layoffs across Xbox, including potentially at many of the studios the company just spent a decade acquiring during the Phil Spencer era. While Xbox pursued a very diverse slate of content to try to grow its Netflix-like subscription service during those years, Sharma’s recent memo and the new reporting from The Information indicates that Microsoft’s gaming division could be retreating into its most consistent money makers.
New games in the Halo, Forza Horizon, and Fallout franchises are reliable best-sellers. Last year’s remake of The Elder Scrolls IV outperformed many of the newer releases that arrived alongside it. But faster game development at the same time that budgets are exploding is a thorny problem to solve and could take years to figure out. If there’s one thing Microsoft hasn’t demonstrated this console generation, it’s a formula for shipping games on-time and at a quality that can turn heads during Game Awards season.
During a Hard Fork appearance earlier this week, Nadella said Sharma was “going to take a fresh look and make sure we deliver on what our fans expect of us.” He added: “We have to turn this into a sustainable business.”
