Phil Spencer’s successor may have taken the helm of Xbox precisely so she could shrink it, and perhaps they should not have acquired so many companies.
Asha Sharma, CEO of Xbox, led the platform into a new era in the blink of an eye, and in the eyes of players she has become a figure no different from her predecessor. After making Game Pass cheaper, refocusing on console hardware, and bringing back exclusive titles, Xbox fans praised her quick action and transparency. Now, however, after multiple studios are reportedly being closed and further mass layoffs are expected, she and her leadership are no different from Spencer’s. According to industry veteran and analyst Joost van Dreunen, this is the job she was actually hired to do: reduce the size of Xbox, because the company had grown too large.
According to van Dreunen, Sharma is preparing for exactly the task she was truly hired for: getting Xbox back on the right track. Van Dreunen describes the current state of the industry as a disruptive cycle rather than a content cycle. The latter rewards major hits, while the former rewards those who can make their products and processes cheaper and more accessible. For Xbox, handling this situation obviously includes sweeping mass layoffs like the ones it has carried out with clockwork precision over the past few years. These dismissals may make fans turn against Sharma in an instant, but at the same time, many industry observers had long expected such measures. Seamus Blackley, the founder and creator of Xbox, claimed when she was announced as the new CEO earlier this year that Sharma’s role would be like that of a palliative-care doctor, gently guiding Xbox into the night.
While the first 100 days were about proving that these concerns were unfounded, these layoffs prove the exact opposite. The Xbox business is not doing well, as Sharma very clearly noted recently in a message to the entire Xbox division, but no one will believe that a company like Microsoft is suffering from a lack of money. Leadership could keep all employees if it wanted to, and Xbox would still barely leave a mark on the company’s operating budget. However, Satya Nadella, CEO of Microsoft, has made it clear: the parent company invested enough in Xbox during the first 25 years of the business, and now it is time for it to become self-sustaining.
At the same time, losing the incredibly talented people who actually make the games people enjoy playing on a platform will not lead to success, especially not the long-term success Microsoft claims it wants for Xbox.
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