Xbox CEO targets industry-leading margins by 2030 in staff memo

Xbox CEO Asha Sharma outlined a plan to surpass rivals on profitability by mid-2030 in a memo to employees on July 30, 2026. The strategy aims to restore the gaming unit's margins to competitive levels by next year and achieve industry-leading margins by fiscal year 2030.

In the memo, Sharma emphasized a shift toward long-term growth, stating the company will not rely on past successes or be hindered by past failures. She stressed the importance of creating experiences that will engage players for decades. Sharma took over as Xbox CEO in February 2026, succeeding Phil Spencer, and has since implemented changes including new leadership appointments, lower Game Pass subscription prices, layoffs, and the divestiture of four development studios. She has also increased focus on exclusive titles for the Xbox console.

The push for improved margins comes after Xbox reported a 10% decline in quarterly revenue on July 29, 2026, its weakest performance since 2022. In contrast, Microsoft's overall results exceeded expectations in cloud infrastructure and productivity software, driving its stock up nearly 16% on July 30, 2026, in its strongest session since 2008. Sharma and Chief Content Officer Matt Booty had previously projected a 3% internal margin, while Sony's game and network services segment posted a 9.9% operating margin in its latest fiscal year and Nintendo's approached 16%.

Sharma's memo detailed that every function and studio will be accountable for returning to growth in player numbers and revenue in the fiscal year ending June 2027. She also announced plans to develop long-term strategies for major franchises across film, television, consumer products, sponsorship, and live experiences, and to form new global partnerships, including in China. Additionally, she aims to grow Xbox's share in casual games through Activision Blizzard's King division, known for Candy Crush Saga.

Microsoft's $75.4 billion acquisition of Activision Blizzard in 2023 boosted revenue but led to overextension. The company previously allowed consumers to try new Call of Duty releases through Game Pass for a small fee, but those titles are now excluded from the service. Microsoft CEO Satya Nadella told analysts on the earnings call that the company is making necessary decisions across content, platform, and operations to reset the gaming business for long-term growth. Microsoft also acquired Mojang, the developer of Minecraft, for $2.5 billion in 2014; the game surpassed Tetris as the world's best-selling title in 2019. Sharma wrote that the company will invest in Minecraft more than ever before.

Sharma's memo set targets for revenue growth to accelerate in fiscal years 2028 and 2029. By fiscal year 2030, the ambition is to reach halfway to the long-term daily-player goal, with sustained double-digit growth in players and engagement and industry-leading margins.