What Xbox CEO Asha Sharma told employees in first townhall since hundreds of layoffs at Microsoft’s gaming division

Xbox CEO Asha Sharma has reportedly addressed company staff in her first company-wide town hall since sweeping summer layoffs hit Microsoft’s gaming division, laying out a comprehensive roadmap to stabilise the brand, committing to traditional console players and preparing for next-generation hardware. Citing a transcript of an internal gathering that followed a turbulent stretch marked by hundreds of job cuts, studio divestments and internal closures, a report by Windows Central says that Sharma acknowledged that Xbox entered 2026 facing severe headwinds, with user engagement hours, active player counts and top-line revenue all sliding downward.She pointed out that the division’s prior subscription approach, which previously led to removing Call of Duty from standard tiers alongside major price cuts, pushed Xbox’s balance sheet into what she termed a “freefall.” Now Sharma has stated that player hours have steadied, while first-party publishing output has bounced back:“Why do we exist? 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,” Sharma reportedly told staff.Highlighting internal metrics, Sharma noted that first-party game (games that Xbox owns and publishes) momentum is up by two to three times over recent historical lows. “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.”She cited early wins from titles like Gears of War: E-Day, Minecraft Dungeons 2, and World of Warcraft Forever, adding that positive public sentiment around the Xbox brand has climbed by 30% over the past year.

‘Four Cs’ and renewed console commitment

Sharma framed the division’s operational recovery around four core pillars: Core, Content, Creation and Connection. Despite broader industry data showing flatlining console hardware adoption worldwide, Sharma argued that Xbox cannot justify expanding into wider segments if it fails to take care of its primary base. Xbox must invest more heavily in home consoles, asserting the company lacks “the right to grow beyond console” if it does not properly support its most dedicated audience.Moreover, the team is said to be prioritising current-gen hardware features, including Xbox Cloud Gaming upgrades, an expanding disc-to-digital migration program, and the continued reach of Xbox Play Anywhere. Sharma also signaled that Xbox Game Pass will introduce greater customisation, allowing users to pick and choose specific content packages rather than taking a one-size-fits-all approach.Looking ahead, Sharma confirmed early architectural details regarding Xbox’s tenth-generation platform, internally codenamed Xbox Helix. Rather than relying on a single piece of living-room silicon, Microsoft is designing a broader suite of hardware options:“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 we will partner on… The operating system is starting to look really good. We’re very excited about this.”