Xbox CEO Admits Game Pass Has Not Worked Out, Reportedly Lost Millions Of Subscribers Since 2024

Xbox CEO Asha Sharma has announced a major restructuring of the company following the failure of Game Pass to meet growth expectations. The service has stalled at approximately 30 million subscribers, far below the 77 million Microsoft projected it would reach by July 2026, according to documents from the Federal Trade Commission’s investigation into Microsoft’s Activision Blizzard acquisition.

Sharma’s memo reveals that the Xbox business is “not healthy,” with operating margins 3-10x lower than comparable platforms. She acknowledged that Microsoft made significant bets on Game Pass—along with multi-platform game releases and expanded content—but these initiatives did not achieve the growth rates the company expected. While these efforts created “meaningful value,” they failed to deliver the acceleration needed to sustain Microsoft’s growth requirements for a publicly traded company.

The restructuring involves mass layoffs affecting 3,200 positions and the divestment of four to five studios. Sharma indicated that the core Xbox business weakened as the company focused resources on strategies that underperformed. Game Pass, which was positioned as the centerpiece of Xbox’s post-COVID strategy, was mentioned only once in her memo—in a critical passage reassessing the previous decade of leadership under former CEO Phil Spencer. The failure represents a significant setback for Microsoft’s gaming ambitions and suggests a fundamental shift in how the company will approach its interactive entertainment business going forward.

Sources

• Xbox CEO Admits Game Pass Has Not Worked Out, Reportedly Lost Millions Of Subscribers Since 2024
• XBOX Game Pass User Count Hasn’t Grown In Years
• XBOX Game Pass Didn’t ‘Grow At The Pace’ Microsoft Had Planned
• Xbox Game Pass subscriber numbers have fallen massively short
• Game Pass could see major change under new Xbox restructure