200 million new players coming to Xbox and its games weren't enough to drive growth in the company's business, according to CEO Asha Sharma.
Xbox just had its worst quarter in years, no thanks to a 10% fall off in revenue from "content and services" and a 13% drop in hardware revenue over the last few months of Microsoft's 2026 fiscal year. Despite all of those flailing stats, Sharma says a ton of new people checked out the gaming division's stuff, actually.
"In [fiscal year 2026], over 200 million new players came to XBOX and our games, but our business did not grow with our audience," Sharma notes over on social media. "We need to close that gap by investing in what players value. That will take time, but we expect to return to growth by the end of [fiscal year 2027]."
Over the last fiscal year, Xbox put out a good chunk of games between Call of Duty: Black Ops 7, Forza Horizon 6, The Outer Worlds 2, Ninja Gaiden 4, and more. The company's numerous evergreen hits (your Minecrafts and Candy Crushes) and multiplatform ports (Starfield) likely also drove growth in the company's player numbers. But, regardless, there's a pretty dramatic gulf between the amount of people checking out games owned by Xbox and the money Xbox is actually making.
Earlier this month, Sharma took some dramatic steps to reorient the company. That included sweeping layoffs across the Xbox division. Four first-party studios were also spun out – Double Fine and Compulsion Games are now independent developers, while Undead Labs and Ninja Theory are in the process of joining new ownership.
As for its current fiscal year – the one we're in for the next 12 months or so – Xbox is betting that its messy return to exclusives could help right the ship. We'll see how the launch of Gears of War: E-Day goes later this year.
