Xbox CEO admits Game Pass failed as Microsoft spends $80 billion and misses subscriber targets by 47 million

New Xbox CEO Asha Sharma has publicly acknowledged that Microsoft's core gaming strategy — built around Game Pass, multiplatform releases, and aggressive studio acquisitions — did not work. The admission came alongside the most sweeping restructuring in Xbox history: 1,600 immediate layoffs, another 1,600 cuts over the next year, and the divestiture of four studios.

Bloomberg reported Microsoft spent nearly $80 billion over the past decade chasing the Game Pass dream. The results fell dramatically short: Microsoft had internally targeted 77 million subscribers by the end of fiscal year 2026, and had even hoped for 100 million by 2030 — a figure revealed during the 2023 FTC vs Microsoft trial. The actual number as of now sits at roughly 30 million, down from 34 million Microsoft itself reported in 2024. That collapse accelerated after Microsoft hiked Game Pass Ultimate's price by 50% in October 2025, pushing it to $30 per month. Xbox chief strategy officer Matthew Ball confirmed that millions of subscribers canceled following that announcement. Microsoft later walked the price back to $23 per month — still higher than the previous $20 rate. New Call of Duty titles were also quietly removed from the service at launch. On the studio side, Double Fine and Compulsion are being spun out, while Ninja Theory and Undead Labs are being sold off entirely. Arkane Lyon is in a consultation process that will determine the fate of both the studio and its in-development project, Marvel's Blade. Sharma framed the situation bluntly: Xbox is operating at margins 3–10 times lower than comparable platform and publishing businesses, and the hardware crisis — driven by AI demand for components and memory — has made a struggling business untenable.