“One of our operating principles is that we earn every single player,” she said. “So, we’ve shipped more in the last few months on our platform than we have in the last year. We’ve been able to see a return to growth on Game Pass.”
Sharma succeeded Phil Spencer, Microsoft’s longtime executive vice president of gaming, who retired from the company after 38 years. Spencer built the division up as a videogames powerhouse but then saw it cede ground in recent years. The results have been disappointing. Quarterly gaming revenue has slid, and Xbox’s hardware revenue has endured 30%-plus declines.
Sharma has engineered a series of changes since starting that have won over some gamers. Aside from the Game Pass move, she nixed the AI Gaming Copilot feature for consoles, scrapped old marketing campaigns, and revived exclusive game titles such as Gears of War: E-Day.
Some gamers were initially wary of Sharma’s appointment due to her AI background. After joining, she told employees in a memo that went viral that Xbox would “not chase short-term efficiency or flood our ecosystem with soulless AI slop.”
On Tuesday, she pointed out that gaming was the original proving ground for compute and AI, since AI infrastructure such as graphic processing units were originally designed for gaming. While she believes AI can invent entirely new genres, she cautioned that it shouldn’t be “painted all over the experience.” And though developers can run local AI inference on Xbox GPUs today, it hasn’t been a priority for the Xbox community, she said.
Xbox and other gaming companies are grappling with a shortage of memory and storage as AI demand surges. Escalating hardware costs are also pinching the company. Sharma noted that the costs of certain console components will continue to increase. In response, she said Xbox is crafting more flexible consumer plans and exploring distribution partnerships to reach new audiences.
Turning Xbox around will take time, Sharma said. She is exploring different business models and believes exclusive services and content will be key to maintain business health.
“I’m trying to be decisive about the things that we need to invest in, the things we need to prioritize, and the things that don’t represent our brand,” she said. “We will execute in days, but expect that it will take a while to show up on the scoreboard.”
