In the wake of mass layoffs at Xbox and several studios exiting the company, Microsoft’s gaming division has outlined it plans for growth. Some of these plans include a focus on its biggest IP, investing more in games like Minecraft, and removing several layers of management to streamline its studio model. One other major area of focus will be on Xbox hardware itself, as the company says its flagship console represents 80% of its current business.
“In order to grow, we made a bunch of bets–and as we did that, we inherently didn’t focus on the core business,” Xbox CEO Asha Sharma said to Fortune. “The number one measure of your strategy is what you put your resources behind, and we simply spread ourselves too thin. A healthy Xbox could weather the shock of the hardware crisis. With an unhealthy Xbox, it becomes really challenging, and it accelerates a lot of the changes we need to make.”
If Xbox is going to focus more on its hardware, then it’s doing so in an industry that’s grappling with sharply increased costs and component shortages. This shift also comes during a time when Xbox hardware revenue has dipped by a shocking 33%–per Microsoft’s latest financial report–and several price hikes on the Xbox Series X|S have only added to the company’s woes. The Xbox Series X 1TB model now retails for $800 (it was originally $500 when it launched), while the Xbox Series S has shot up from its launch price of $250 to $500.
A second increase is also looking likely, and the next-gen console Project Helix will likely also be extremely expensive.
One method that Microsoft is reportedly looking at to cut down on costs is to forego the disc drive on Project Helix. Xbox rival Sony has already confirmed that it will not support PlayStation discs after 2028, and it’s rumored that the PS6 won’t have a disc drive either. Microsoft is reportedly working on a disc-to-digital feature that would enable users to bring their physical library with them into the next-gen, with the program said to support both Xbox One and Xbox Series X|S games.
Meanwhile, Microsoft’s Xbox restructuring hasn’t been the subject of criticism across the games industry–a case of “catastrophic mismanagement,” as one expert has described the news. With 3,200 people being laid off–roughly 20% of the Xbox workforce–the changes will also see Double Fine and Compulsion become independent studios, Ninja Theory and Undead Labs have been sold, and Arkane Lyon has entered a mandatory consultation period to figure out what’s next for the Marvel’s Blade developer.