Xbox Initiates “Reset”, as CEO Divulges Company Has Spent Over $20 Billion in Gaming Excluding Activision Acquisition; Major Crisis for Project Helix Due to Parts
Earlier this year, Microsoft rocked the Xbox crib by announcing that the division has a new head (and face) in Asha Sharma. Since then, Sharma has been adamant in the “return of Xbox,” not just when it comes to console exclusivity of their games, but even when it comes to the company’s next-gen console.
Today, Sharma has once again rocked the Xbox boat, by announcing an Xbox “reset,” and how they will tackle the next 100 days.
There are some worrying things to read about, as Sharma reveals the intiatives they need to do in order to right this ship.
Xbox Has Spent $20 Billion in Investments When It Comes to Gaming
Sharma revealed that Microsoft spent $20 billion in ongoing investments in the games division, and this does not even factor in the Activision-Blizzard acquisition.
Per Sharma’s letter: “We will end this fiscal year at about a 3% accountability margin, down year-over-year. Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”
Sharma adds that Xbox has overextended as it expanded by adding new studios under the Xbox brand, though they are the owners of some of gaming’s most recognizable IPs, and said, “In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content. We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win. At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next 5 years.”
Xbox Project Helix Is Under a Hardware Component Crisis
Sharma also talked about the future — or more specifically, the next-gen console of Xbox. Codenamed “Project Helix,” Sharma admitted that they are facing a crisis when it comes to assembling the console itself, citing rising component costs.
Sharma on Project Helix: “We are in a hardware component crisis. When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade. We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.”
Not only that, but Sharma admitted they are not built for the battle ahead. and said, “Our systems are overly complex, spanning hundreds of dependencies, which hinders our ability to move fast. We’ve become too reliant on vendors to operate our systems and must become more self-reliant as an engineering culture to build for the future. We must increase the value we ship to players while decreasing the time it takes to do so. Going forward, we’ll evolve and rebuild our stack and look at capabilities across all of XBOX and potential M&A to help us win in hardware, PC, mobile, and streaming.”
All these things might be hard to take for Xbox fans, but the good thing is, it seems Sharma has a solid plan she wants to execute, and there’s no way to go but up, right?
In related news, the Xbox CEO also said they are aiming to have more console exclusives once the games division is in a healthier place.
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