The Xbox reset doesn't have an end date

When Asha Sharma took over as CEO of Xbox, she called for a "reset" of the business, citing low accountability margins, declining revenues, and the hardware component crisis. What was intended as a major disruption to provide stability has turned into a prolonged process. Instead of certainty, employees face continuous layoffs: 268 jobs were cut this week, adding to the roughly 1,600 already lost. This comes as the company still has hundreds of layoffs to go before reaching its earlier target of 3,200 job cuts.

The restructuring appears increasingly incoherent. Rather than simply removing layers of management, the company is reshuffling major studios and IP out of Xbox Game Studios and into the structures of its major acquisitions. Obsidian is moving under the Bethesda umbrella, while Activision has become the effective custodian of the Halo franchise and the venerable Rare studio. This effectively shifts internal development assets into the large publisher structures that Microsoft acquired to scale the business.

The situation with Halo Studios highlights this shift: while the studio created specifically for the franchise is being gutted, its crown jewel IP, Halo, now sits within Activision. Meanwhile, the fate of Ninja Theory remains uncertain, and the status of Arkane remains up in the air. Amidst this cost-cutting, Xbox Game Studios also secured publishing rights for Hideo Kojima's Physint, a major commitment for a game that is not expected to release until around 2030.

The central question is whether Microsoft has a coherent strategy. Moving valuable studios into Activision and Bethesda might help bolster book valuations following massive acquisitions, but it fails to outline what Xbox will look like in five to ten years. Without a clear, credible pitch for what its next-gen system will offer, the company faces a steep climb to win back consumers while stuck in an interminable reset.