This is a total mess IMHO.

- The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million

So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous).

Some points -

- They are huge business even now - 5 billion per quarter revenue is no joke

- They did not have to buy all those studios

- They looked at Netflix, and wanted the sweet monthly subscription cash stream

- Then they did not have to give away popular games day one on Game Pass

- And finally, they did not have to raise Game Pass prices to improve the profit margins. Of course, consumers pulled out.

- Once again, short term vision, crazy decisions, bad spending spree and a constant need to "make numbers go up" and who has to pay for all this?

It was pretty rich seeing armchair video game industry analysts act like the new CEO was gonna usher in a new age for Microsoft's gaming division because she got to announce the updated logo and some games that would have obviously been in development long before she became CEO.

Microsoft is never going to figure out gaming. It's more art than engineering and they can barely manage the engineering with all the intervention from marketing and HR in their products.

To me it's mostly unfortunate that this has left PlayStation with no direct competition because they've noticed and leaned into the not-giving-a-shit attitude after they had such a great console generation with the PS4. It's kinda crazy that we're already almost due for a new console generation and there's very little appetite for new consoles after this generation where it feels like it barely got started. And between graphics almost certainly at the point of diminishing returns, and hardware prices like they are right now, I can't imagine there's a market to sell something more capable than current gen consoles. The industry is in a very strange state.

  It is neither possible nor desirable to own every great independent studio. We have also learned that we are not the best home for every type of studio

This is shockingly self-aware for microsoft

This is incredibly sad for a lot of my friends who are finding themselves out of work despite delivering well received products.

But at the same time I appreciate the candor of Asha saying that the corporate management are to blame and letting studios go back to being independent where possible.

Phil Spencer really messed up. Everyone in the industry knew Microsoft were making bad calls trying to dig themselves a hole with gamepass and simultaneously digging a hole with their acquisition spree. I’m glad that Asha is laying this bare even though it sucks to be brought in as the hatchet person.

This is an example of the glass cliff and I’m hoping she can help right the ship. I think they need to split to a wholly owned subsidiary rather than be in Microsoft proper, and I expect that to be announced at the Q1 investor meetings.

Phil really dug their hole deep. Microsoft themselves encouraged it. It’s been a decade of sheer incompetence at the highest level so I’m hoping they can right this without taking out half the industry in their wake.

At some point, the games industry decided it wanted to be interactive Hollywood, and the consequences are entirely predictable. Meanwhile, Nintendo just quietly shipped 3.8 million units of Tomodachi Life in two weeks, and 4 million of Pokopia in five. They're making actual games. Sony's obsession with prestige cinematic bloat, like Xbox, has also put them in a slow-motion death spiral that's going to become painfully obvious in a few years.

"And we will streamline how we work across our tools, with a cleaner code base, shared services, and 50% reduced vendor spend."

How will they achieve cleaner code, with fewer workers? Seems like a well-intentioned platitude.

Game Pass has caused a lot of direct sales losses to game developers in favor of Microsoft trying to find a Netflix-like cash cow for itself. The numbers never added up, but it is not a surprise everyone nodded and went along with it. I wonder what the career repercussions would be for speaking up - but it doesn’t matter because they are getting fired anyway.

Call of Duty alone lost $300 million: https://arstechnica.com/gaming/2026/04/microsofts-game-pass-...

I look forward to the source code leaks.

They will just continue smash thru exactly what is killing them because they do not know how to reset. More micro transactions, Halo 14-39, games launching before they're ready, price increases, etc. All of that looks good on paper, so they will take no action against. The XBOX is hitting icebergs, and instead of slowing down, they will just call for more speed.

> We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes.

xbox-specific issues aside, this proposes an interesting view of the future of work.

I think some of these game studios got so content with Microsoft constantly paying that they forgot to make games that would actually sell.

South of Midnight took 7 years to make and cost $100 million to make... yet sold hardly any copies and I'm not even sure who they were trying to make it for.

Meanwhile you have studios like Sandfall and Warhorse pumping out games on a fraction of the budget that ship millions (and imho, make better games).

> We will reduce management layers to no more than 5, and where possible, 3.

This reads like something from The Office.

It a pity. So many good studios gutted, for the only reason "margins too thin"

When I bought my XBox i spent half a day setting up an account and payments.

Good old times. The last time I tried to buy something on Xbox it fails miserable with multiple cryptic error messages - mostly around my credit card.

No problem though to biy the game on my mac via browser and then after a few more settings actually showed up on my xbox.

Xbox has an interesting opportunity going forward, that I expect they'll fumble.

Interest in physical media has actually been on the upswing, and, with Sony announcing their plans to abandon physical media, it feels like MS has a chance be the "good guys" like what Sony did to MS when MS threatened to ruin physical media prior to the Xbox One release.

However, I'm expecting Microsoft to simply follow Sony's path, because I think they are already going down a path that favors digital-only, and I also think they just don't care to distinguish themselves. It seems like Xbox's claim to fame for the past few years is "It has game pass, and it can play a lot of the same games PlayStation can."

Impacted non-studio dev here. It's a bloodbath like some of the leaks in the past few weeks have said. Many important platform/infra teams getting gutted, even in areas where there's supposedly a ton of future investment.

  I want XBOX to be one of the few companies that entertains more than a billion people each day

"more than a billion"? What are we doing here? Do you have any idea what your target market is? Surely someone in your organization can provide you with a good stretch goal ... >10% of all humans using an XBox daily is not that.

Seriously, I cannot fathom why you would say this. Innumeracy? Narcissistic delusion? Stealth launch for a new industrial human cloning project?

>Today, in some parts of the company, work passes through as many as 14 layers of management.

Not even national security institutions operate like this

On one hand, the idea of using Microsoft’s crazy amounts of money to try to build a subscription gaming business feels like it should have been more successful than it has been. On the other, I think gaming has some distinct qualities vs TV/Movies/Music or other types of software that makes the idea seem way less appealing. Curious to see what the new direction looks like

"role eliminations".. So people losing jobs then :/

Microsoft just never sorted out their exclusivity problem, tried to acquire their way to it, only to then be stymied by regulators, all the while having second-best hardware compared to the PS5.

Any details about the studio spin-outs? The rumors were that Double Fine etc. would be closed, but all we know now is that some of them are being sold to management and others are being sold to other investors. Nothing about any commensurate restructurings.

I wonder about the future of inExile and clockwork revolution

I think the Xbox Series X will be my last Xbox after owning Xbox, Xbox 360, Xbox One, and the Xbox Series X. I was all-in on their platform and I even paid for Game Pass for many years.

But they kept increasing the cost of Game Pass with no new features, the platform has seemed stagnant, and honestly I can't tell you why my Series X is better than my Xbox One. Literally I don't see a difference. I'm sure there is one but as a user I really didn't feel like it was a big step up. I bought it because I had every other Xbox and it seemed like the next logical step.

That coupled with most games feeling like lootboxes wrapped in just enough of a game to justify calling it one, at higher and higher price points, all while trying to get more money after they've taken your $70/$80 for the base game. Oh wait, you bought the poor-person $70 version? You really need to the Ultra Collectors Edition Gold Special Release Version for $120. Oh also, make sure you are buying the season pass...

Meanwhile I buy games on my steam deck and/or from indie developers for a max of $30 and get way more gameplay/fun that the "AAA" games (which have largely sucked IMHO).

I'm over here playing Mass Effect 1-3, Skyrim, Fallout 4, and other games OVER A DECADE AGO. They are the only games not completely ruined by lootboxes, always-online BS, or trying to sell you a shell of a game with extras you have to buy [0]. I was excited for Starfield (Skyrim in space!!) but it was a complete bust. After spending, quite literally, 1000's of hours in Skyrim (and buying and rebuying the Anniversary/Special/Collector's edition enough times to be embarrassing) I could not get excited about Starfield and stopped playing after a few hours. The new Halo was meh, I played through it and the open world was somewhat cool but I guess they wanted to do seasons of new content and I have zero interest in that. Give me a solid single player game, that's all I want. I cancelled Game Pass after realizing I was paying an absurd amount of money to play a single game (Deep Rock Galactic).

I think I'll stick to my Steam Deck which I enjoy way more than my Series X.

[0] Yes, Skyrim/Fallout had expansion content but it's tame compared to most games today.

Related:

Microsoft cuts 4,800 Jobs, Half from Xbox division

https://news.ycombinator.com/item?id=48804401

Continuing the long trend of major tech companies making everything they touch worse.

>we will help independent creators succeed by providing open development tools and audiences to realize their vision.

Bravo!

>Today, in some parts of the company, work passes through as many as 14 layers of management.

LMAO – reset approved.

"Management fucked up, and now you all get to pay for it. Have a nice day :)"

"Today, in some parts of the company, work passes through as many as 14 layers of management. Our platform teams are 40% larger than they were at the start of this generation, even as our player base and playtime have declined. "

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