Xbox’s Recent Efforts Haven’t Changed Anything And The Future Remains Bleak, Expert Says

Xbox CEO Asha Sharma has undertaken a number of efforts thus far to help get the business back into a healthy place, and nothing has worked, Circana analyst Mat Piscatella says.

He told The Game Business that based on the sales and engagement data he sees for the US gaming industry, “I’m not seeing [the moves] have any positive impact” for Xbox.

The disc-to-digital program “hasn’t changed their sales of new physical software trend at all,” he added. Additionally, making Gears of War: E-Day exclusive on console to Xbox “hasn’t made any difference” in terms of selling more Xbox hardware. In fact, Xbox sales continue to spiral. Sharma says there is a supply issue, but, in the US at least, you can get a new Xbox very easily.

Piscatella said E-Day is a “Gears-ass Gears of War game,” and a gorgeous one. But making it exclusive to Xbox created a scenario where “you chop the legs out” from under its potential potential to boost Xbox generally. “At least in the short term, it hasn’t made a difference,” he said.

There was clear and obvious evidence that E-Day was planned for PS5, but it was never released on Sony’s console. Other industry experts said Microsoft purposefully sent E-Day out to die “for hearts and minds.”

Additionally, Piscatella said Sharma’s decision to remove new Call of Duty games from Game Pass was another loser of a decision. He said the data he’s seeing shows that the Call of Duty franchise “lost a ton of engagement” due to Modern Warfare 4 being stripped out of Game Pass.

“And you got no benefit. It’s really hard to find any signs of positivity or hope on that platform right now,” he said.

Piscatella went on to say that the efforts Microsoft is undertaking are for “Twitter likes” from hardcore fans. “But other than that, in terms of actual results, I’m not seeing anything right now,” he said.

Sharma’s turnaround plan for Xbox was never expected to yield immediate results–she only took the job in February and she inherited numerous foundational problems. In a memo to staff seen by CNBC, Sharma said she’s taking a “long-term” view to help turn things around, and that includes pushing every studio to return to growth for players and revenue by the end of the fiscal year ending June 2027. Beyond games, Sharma has established a unit called XP, which will expand Xbox’s games across film, TV, consumer products, sponsorships, and live experiences, as well as new initiatives in China.

Also in the memo, Sharma said she will push her teams to help Xbox get back in line with rivals Sony and Nintendo by 2027 in terms of profit margins, and then beat them by mid-2030. For comparison, Xbox currently reports about a 3% internal margin, which compares to 9.9% for PlayStation and 16% for Nintendo, according to CNBC.

A 3% profit margin means that for every $100 that Xbox brings in, it spent $97 to do so and keeps $3. A higher profit margin is better, and that’s what Sharma is pushing for.