Today, Xbox CEO Asha Sharma addressed all of Xbox in an internal town hall, the transcript of which was shared to Windows Central and verified by trusted sources.
Xbox has been undergoing something of a reset this year, with divestitures, layoffs, and structural changes. Xbox Game Pass removed Call of Duty and picked up a big price cut, Xbox also returned to exclusive games and content, and began investing in marketing and features for its Xbox Series X|S consoles again for the first time in years.
"Why do we exist?" Sharma said, "We exist to be where the world plays, we will know when we have a billion daily active people, and we have a right to win because we're now focused on our fans and franchises."
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Sharma noted that Xbox was declining in hours spent, players, and revenue at the start of the year. She now says Xbox has stabilized in hours spent, and she's now said after year-over-year declines, Xbox has now returned to growth. She reiterated that the previous Xbox Game Pass strategy sent Xbox into "freefall" declines on the balance sheet, likely referring to the damage at both ends to Call of Duty and Xbox Game Pass.
"We're making the right decisions to reinvest in the business, after an all time low, we've started to return to growth, more than 2 to 3 times what we were, and we expect that continue." Asha Sharma also called out Gears of War: E-Day, Minecraft Dungeons 2, and World of Warcraft Forever for having "strong" starts, and noted that Xbox has seen a 30% increase in positive brand sentiment over the past year.
Growing Xbox Series X|S, leveraging Xbox Helix, Xbox Game Pass, and more handhelds?
Core, content, creation, and connection, are the "four C's" Asha Sharma described as leading Xbox forward. She said that Xbox's market position suggests it needs to invest more in Xbox console, despite the fact the segment overall isn't growing in the gaming industry — she says Xbox still has an opportunity to grow in the space. She also said Xbox doesn't have "the right" to grow beyond console if it can't serve their "most valuable players the right way."
Asha Sharma says strengthening Gen-9 (Xbox Series X|S) is key to this, calling out innovations like Xbox Cloud Gaming, Xbox's disc-to-digital program, and Xbox Play Anywhere growth. She also hinted that Xbox Game Pass will get more "flexible for more players" in the future, reiterating previous hints that users will be able to tailor exactly what types of content they want to access in the service.
Asha Sharma also called out Gen-10, Xbox Helix, describing it as a "family of devices."
"We are moving to a family of devices for Gen-10. There is not one device that fits all. We will certainly have a great console first, but we also know that many players will be on the go. There are some things that we are the best in the world to manufacture, and there are other things that will we partner on. So, we will be sharing more about that as our plans develop. The operating system is starting to look really good. We're very excited about this."
Asha Sharma also spoke about Xbox PC and Battle.net, talking about an intention to grow Battle.net as a platform. She said Battle.net is almost on-par with Steam for user retention, and the recent partnership to bring CD Projekt RED's games like Witcher 3 to Battle.net will grow further. "We will do it the right way for those communities," she said, hinting that Battle.net will remain a more curated store compared to the likes of Steam or Xbox PC.
On further opportunities, Asha Sharma also revealed that Xbox PC is, in fact, the number 1 PC gaming storefront in China (although, it has been suggested to me that this claim likely excludes China-based Steam users using a VPN — I'm exploring this comment a bit more.) Asha Sharma also stated that they'll continue to invest in other PC apps where there's a distinct audience, i.e. Steam in general.
Sharma also said that Xbox is "simplifying" the target and streamlining APIs for publishing on Xbox to make it easier for developers to ship on Xbox Series X|S, Xbox Helix, and Xbox PC — which has long been a sore point.
Xbox's strategy looks like the right one, for now
Xbox has seen tons of layoffs over the summer in a big effort to restructure more of the business away from the ballooning costs of Microsoft bureaucracy. To that end, it has shifted some Xbox studios under purpose-built subsidiary publishers like Activision and Bethesda, divested some, and shuttered others.
Microsoft has also doubled down on its core audience, Xbox console players, whose neglect became untenable at the start of the year as Microsoft seemed to focus on future-facing telemetry data at the cost of the current reality.
Indeed, I wrote two years ago that Xbox was neglecting its core at the cost of growth that might never materialize, and it seems that growth indeed never did materialize in the previous strategy.
There are positive shoots throughout Sharma's pitch to Xbox staff, but she still noted upon caution with regards to the state of the economy, the RAMpocalypse, and generalized disruption in the entertainment biz.
How are you feeling about Xbox's new strategy so far? Let us know in the comments.
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