Highlights
- Xbox is considering changes to Game Pass as Asha Sharma reshapes Microsoft’s gaming strategy.
- Project Helix and a next-generation handheld are central to Xbox’s reported hardware plans.
- Sharma is prioritizing profitability, major franchises, and audience growth amid internal restructuring.
Microsoft is considering a more customizable Xbox Game Pass subscription as its gaming division cuts jobs and develops new hardware, including a console internally projected to cost consumers between $1,200 and $1,800 without company subsidies, according to Fortune.
The Oct. 20 report describes Xbox Chief Executive Asha Sharma’s efforts to improve the business’s financial performance through changes to subscriptions, hardware and its game portfolio. The projected console price is preliminary; Microsoft has not announced a retail price.
Microsoft is reportedly targeting the 2027 holiday season for a next-generation handheld and the 2028 holidays for its next console, code-named Project Helix. Neither launch window has been formally announced. The report does not establish whether Microsoft would manufacture the handheld itself or work with a hardware partner.
How Will Xbox Restructure Game Pass and its Hardware?
The proposed Game Pass overhaul would let players select features à la carte, with optional components for console-only games, cloud gaming and multiplayer, according to accounts of Fortune’s reporting.
The changes remain unannounced officially.
Sharma’s wider strategy focuses on hardware, major franchises, player experience, and new commercial opportunities. Xbox has created a team to expand properties such as Minecraft across different formats and is exploring artificial intelligence (AI) to improve game development and distribution.
The changes follow several business challenges:
- Console competition: Third-party estimates cited in the report put current-generation Xbox sales at slightly more than one-third of PlayStation 5 sales.
- Subscription economics: Former employees claimed that Game Pass may have cannibalized sales of higher-priced first-party games, particularly during launch periods.
- Profitability: The report puts Xbox’s profit margin, based on a Microsoft measure, at around 3%, below the levels of competing businesses.
- Franchise priorities: Xbox is shifting resources toward established properties and studios with stronger commercial prospects while aiming to release major games more frequently.
Project Helix Dispute and Xbox Layoffs
Xbox and Windows leaders reportedly clashed over the software for Project Helix and the upcoming handheld.
Windows executives wanted the handheld to use a streamlined version of Windows Home, while Sharma’s team sought greater control over the software to optimize gaming performance. According to people briefed on the dispute, a senior Xbox executive threatened to cancel the handheld rather than adopt the Windows build.
Xbox now largely controls the operating system’s development for Project Helix. However, Sharma stressed the need for collaboration, saying they “can’t build Helix on our own.”
The restructuring has also resulted in 1,868 job cuts, with a target of reducing headcount by 3,200 over the following year.
Likewise, further layoffs were planned for October 2026, November 2026, and January 2027, according to people familiar with the plans. Sharma has further consolidated management layers and redirected investment toward major franchises.
Can Asha Sharma Restore Xbox’s Position?
Appointed in February 2026, Sharma has set a goal of making Xbox the “No. 1 entertainment company.” She also aims to grow the platform to more than 1 billion daily active users (DAUs), up from approximately 100 million currently.
Sharma indicated that she has no timeline for how long she expects to remain CEO. Meanwhile, speculation continues over whether Xbox could eventually become a subsidiary, attract outside investment, or separate from Microsoft.
Microsoft commercial chief, Judson Althoff, defended Xbox’s strategic value, citing its role in stress-testing the company’s cloud infrastructure, maintaining retail relationships, and reaching creator audiences through Minecraft. He said Microsoft would not have appointed Sharma to a business it intended to sell, adding that “time will tell.”
Sharma’s plans will test whether Xbox can improve profitability and expand its audience while maintaining its relevance in a market shaped by consoles, mobile gaming, PCs, and cloud services.
