Xbox Hits the 'Reset' Button (On Its Employees)
“You spent $20 billion to lose $500 million a year and the best word you could find was 'reset,' not 'catastrophe.'”
Sally's not done with you yet.
Drop a URL, screenshot, or file and Sally will give you the honest truth.
Sally's Take
Let's just sit with the number for a moment. You spent over $20 billion on content, platform, and hardware subsidies across five years, excluding the $69 billion Activision acquisition, and your annual revenue went DOWN by nearly $500 million over that same stretch. That is not a business strategy. That is a money incinerator with a controller-shaped logo on it. The fact that your own new CEO had to stand at a Bloomberg conference and say the business 'is not in a healthy spot' tells you everything: the situation is so bad that spin has fully left the building.
Your memo is titled 'Next 100 Days: Xbox Reset,' which is a very confident name for a document that is functionally a slow-motion apology tour. Co-signed by a CEO who has been in her chair for four months and an executive who has watched studio after studio get shuttered on his watch, the memo's most honest line is also its most damning: 'Going forward, this cannot continue.' Correct. It cannot. It has also, by the receipts in your own document, been continuing for five full years. The 'reset' branding is doing heavy lifting over a crater.
And then there is the hardware side of this disaster, which somehow gets worse the closer you look. Storage component costs for Xbox consoles have more than doubled since February 2026, and you are projecting they will hit five times their Fall 2025 price by the 2027 holiday season because AI data centers are hoovering up the same memory chips you need. So your parent company's AI ambitions are actively cannibalizing your console business. Microsoft is essentially stepping on its own oxygen hose and calling it a pivot.
Think your work can survive this?
Drop a URL, screenshot, or file and Sally will give you the honest truth.
What Actually Happened
- •Bloomberg's Jason Schreier reported on June 10, 2026 that Microsoft's Xbox division is planning major layoffs to take effect shortly after the close of its fiscal year on June 30, 2026, with Giant Bomb citing a figure of approximately 1,000 employees affected.
- •A memo titled 'Next 100 Days: Xbox Reset,' co-signed by new Xbox CEO Asha Sharma and Xbox Game Studios head Matt Booty, disclosed that Microsoft Gaming spent over $20 billion on content, platform, and hardware subsidies over five years, while annual revenue declined by nearly $500 million across that same period.
- •The division is projected to finish the fiscal year at approximately a 3% accountability margin, down year-over-year, and the memo states bluntly: 'Going forward, this cannot continue.'
- •Storage component costs for Xbox consoles have more than doubled since Sharma joined in February 2026, and are projected to reach five times their Fall 2025 price by the 2027 holiday season, a spike Sharma attributes directly to AI data center buildouts competing for the same memory components.
- •This represents Microsoft Gaming's fifth major layoff wave since the Activision Blizzard King merger closed, following previous cuts that eliminated studios including Arkane Austin, Alpha Dog Games, and The Initiative, and canceled projects including Perfect Dark and Everwild. The Verge reported additional studio closures or lineup changes could still be coming.
Who Got Burned
The roughly 1,000 employees reportedly facing layoffs are the most immediate casualties, people who built careers inside a division that was burning $20 billion and never once apparently stopped to ask whether it was working. The developers at unnamed studios facing potential closure are watching the sword hang overhead with no official confirmation. Asha Sharma inherits a hole that was dug entirely before she arrived and is now publicly associated with the cleanup. Matt Booty, who has been there for all of it, co-signs a memo admitting the model was broken. And every Xbox hardware fan who bought into the ecosystem gets to watch their console's future get squeezed between a spreadsheet and a data center that Microsoft cares about considerably more.
Silver Lining
Here is the thing about a memo this honest: it is actually rare. Sharma did not dress this up in corporate poetry about 'exciting transformations' and 'unlocking synergies.' She published the revenue decline, she named the cost spike, she said the quiet part out loud at a major conference days before the official announcement. That level of transparency from inside a trillion-dollar company is genuinely unusual, and it suggests the people now in charge of Xbox understand the actual problem rather than papering over it. The pivot back toward console exclusives and self-reliance is the right call, years overdue but directionally correct. If the diagnosis is finally honest, the treatment has at least a chance of working.
Your turn. Drop something.
Drop a URL, screenshot, or file and Sally will give you the honest truth.