Xbox Reset Takes Shape as Asha Sharma Rules Out a Sale

Microsoft is keeping Xbox within the company as Asha Sharma leads a restructuring that is changing its workforce, studios, and subscriptions. The strategy follows years of acquisitions and rising game-development costs.

Sharma became Xbox CEO in February 2026 after serving as Microsoft’s CoreAI product president and Instacart’s chief operating officer. In a Sep 30, 2026, New York Times interview, she rejected reports that Microsoft CEO Satya Nadella and CFO Amy Hood were considering spinning out Xbox.

“Xbox is not for sale,” Sharma clarified, while leaving room for partnerships and changes to the division’s operating model.

Microsoft’s Xbox Strategy Follows Years of Acquisitions

The restructuring began in June 2026, when Sharma described Xbox’s business as unhealthy.

On July 6, 2026, Microsoft announced plans to eliminate approximately 3,200 roles across its Xbox gaming division during fiscal year 2027, which concludes in June 2027. The company is also reducing management layers, offloading smaller studios, and concentrating resources on major franchises.

The changes have since reached several development teams.

Halo moved under Activision, alongside Rare and World’s Edge, while Bethesda took responsibility for Obsidian. Playground Games and Turn 10 were combined around Fable and Forza. Microsoft laid off 268 additional employees in late September, affecting Halo Studios and other Xbox teams.

The reset follows an acquisition strategy that began with Microsoft’s $2.5B USD Mojang purchase in 2014 and ended up in its $75.4B Activision Blizzard deal. Game Pass reached 34M subscribers before declining, while Microsoft stopped adding Call of Duty releases immediately because it feared software-sales cannibalization.

Xbox Expands Beyond Consoles

Sharma’s strategy also targets audiences outside traditional console markets.

Likewise, Xbox currently reports 500M monthly players. Sharma’s strategy aims to expand that reach to one billion people by using cloud technology to bring Xbox properties to audiences across Latin America, Africa, and South Asia.

The company is reinvesting in Minecraft to compete for younger audiences alongside Roblox and developing its next-generation console, Project Helix. Xbox has actively pursued external partnerships, including Hideo Kojima’s Physint, while continuing cooperation with Sony.

Nadella has backed Sharma’s restructuring and called for a sustainable business model that expands gaming to more people. Sharma has acknowledged the scale of the challenge, saying, “We’ve got a long way to go with Microsoft,” while committing to a long-term approach.