Xbox CEO Asha Sharma and Xbox Game Studios Head Matt Booty emailed employees on June 10 with a blunt message that current operations cannot continue. The note outlined five harsh realities facing the division, including low profits and rising costs. Bloomberg separately reported that major layoffs are planned for next month.
The email, posted on Xbox Wire, described Xbox's fiscal year ending June 30 as yielding only a 3 percent profit margin. It noted $20 billion spent on studio investments over five years, excluding the $69 billion Activision Blizzard King acquisition, while annual revenue fell nearly half a billion dollars. Sharma and Booty also pointed to a hardware component crisis, with storage costs now four times higher than last fall and set to rise further by holiday 2027. They called the studio system overextended and the platform infrastructure overly complex and reliant on vendors. The pair wrote that the division must become more self-reliant and reassess investments over the next five years. Bloomberg sources said the layoffs, along with marketing cuts, will follow the fiscal year end, though the number affected remains unknown.
