XBOX CEO Outlines FY27 Turnaround Plan in Internal Memo

If you've been keeping an eye on the gaming industry lately, you already know XBOX just came off one of its roughest quarters in recent memory. Right on the heels of that, a new internal memo surfaced from XBOX CEO Asha Sharma, laying out where the brand goes from here.

The memo is pretty direct about the goal: get XBOX back to player and revenue growth by the end of fiscal year 2027. Sharma broke the plan down into four main priorities, and if you read between the lines, you can tell exactly where the company feels it dropped the ball.

The first priority is strengthening the platform through console content.

The thinking here seems to be that console players are more likely to actually spend money on things like Game Pass, so doubling down on making the console experience worth sticking around for makes sense from a revenue standpoint. The second priority is turning great games into global franchises, and you can already see this playing out with Fallout.

There's a clear push to treat it less like a single video game series, and more like a full media franchise, complete with television tie-ins, merchandising, and the kind of cross-platform presence you'd expect from a movie studio rather than a game publisher.

The third priority, and honestly the one that stands out the most, is turning Minecraft into the world's creator platform. If you think about it, this feels like a move that probably should have happened years ago. You've likely noticed a wave of Minecraft-style games popping up over the last few years, and Roblox built an entire empire around giving players tools to create their own experiences inside one platform.

XBOX seems to finally be catching on to that same idea with Minecraft, and it might end up being one of the biggest pieces of the puzzle if the company is serious about chasing a billion daily active users. The fourth priority is about connection, meaning extending the world's fans already love into new formats.

Think theme parks, movies, live events, things of that sort.

Similar to what other major gaming franchises have already done by branching into physical, real-world experiences. On top of those four priorities, Sharma also shared how progress will actually get measured going forward.

The first stage is simply returning to growth by fiscal year 2027. The second stage, covering fiscal years 2028 and 2029, is about turning these new bets into real, sustained growth. According to the memo, every priority needs to start producing actual player value and revenue, not just sound good written down.

You can already see the pressure this is putting on smaller studios connected to XBOX. Double Fine, for example, just announced it's going independent again after being divested from XBOX a few weeks ago, and that move came with a 25 percent staff reduction, meaning 23 people lost their jobs.

It's a rough reminder that this push toward profitability isn't just talk, and there's likely more restructuring coming throughout the rest of the year, since only about half of the previously announced layoffs have actually happened so far.

Beyond those four priorities, there's also a broader plan to find new players outside the traditional console space, through PC, cloud gaming, and other platforms.

Long term, that includes monetizing big franchises like Fallout across film, television, consumer products, sponsorships, and live experiences, along with forming new partnerships in markets around the world, including China. There's also specific mention of pouring even more investment into Candy Crush and Minecraft.

At one point, the CEO reportedly emphasized wanting to focus not just on the company's biggest existing franchises, but on finding the next big original idea, which suggests there's an internal search happening for whatever comes next after Minecraft and Fallout.

There's also a separate update worth mentioning here. XBOX streaming has now expanded to more than 150 million TVs and devices worldwide, with new support rolling out through VIDAA OS and Hisense hardware. The reasoning is pretty simple: not everyone can afford dedicated gaming hardware, so meeting people on devices they already own is one more way to grow the user base without requiring a console purchase at all.

Now here's why all of this matters so much right now. According to numbers that came out around the same time as the memo, gaming as a division is currently sitting at a loss of roughly 1.7 billion dollars, compared to Microsoft's server products and cloud services division, which is up 31 billion dollars.

Windows and devices is down about 0.2 billion.

Content and service revenue, including Game Pass, dropped 10 percent, and hardware revenue dropped 13 percent, with overall gaming revenue declining compared to the same period a year earlier. Microsoft as a whole actually posted a record quarter, driven heavily by Azure, Microsoft 365, and AI growth, but gaming ended up being one of the weakest performing divisions in the entire company.

Given how dire those numbers look, it's genuinely starting to feel like XBOX has never been closer to being spun off as its own separate entity. That's speculation at this point, but the financial gap between gaming and the rest of Microsoft's business is hard to ignore.

Microsoft CEO Satya Nadella addressed the situation directly, saying the company is making the necessary decisions across its content portfolio, platform, and operations to reset the business for long-term growth. He pointed to strong IP and talented studios around the world as reasons for confidence, and reiterated that same fiscal year 2027 target for returning to growth.

Whatever platform you personally prefer, it's worth hoping XBOX actually pulls this off. Competition matters. If one platform disappears or gets absorbed elsewhere, everyone ends up with fewer real alternatives, and if you're locked into one ecosystem with nowhere else to go, that's not a great position to be in as a consumer.

Every time there's a major outage, it's a reminder of exactly that risk, and hopefully it pushes the company toward a better overall experience.

There are also bigger unanswered questions hanging over all of this, especially around Project Helix and the repeated talk of component prices increasing because of AI demand. Some estimates put the increase at around five times current prices, which would mean something like the Series X could end up costing close to 1,200 dollars.

That makes it genuinely hard to picture how any new hardware could launch at a reasonable price point anytime soon. Meanwhile, Nintendo looks like it's in a comfortable spot for at least the next decade thanks to the timing of the Switch 2 launch, which makes the contrast with where XBOX currently stands even more noticeable.

As of right now, however, there is no clear vision of what success will look like for XBOX in the future, or even at what point it will become successful again. The previous management team had the appearance of having at least a plan on how to move toward success.

It remains to be seen whether the present strategy will have the same impact, but it would appear that this is certainly a critical time to produce some results rather than just writing another report.